PRIVATE BUSINESS

Barclays Group Reorganisation Bill [Lords] (By  Order)

Order for Third Reading read.
	To be read the Third time on Wednesday 16 October.

Oral Answers to Questions

INTERNATIONAL DEVELOPMENT

The Secretary of State was asked—

AIDS Pandemic

Gordon Prentice: What help she is giving to Botswana to help it tackle the AIDS pandemic.

Sally Keeble: Botswana is one of Africa's economic success stories, with a per capita gross domestic product of US$3,070. However, it is also the country most badly affected by HIV in the world, with 38.8 per cent. of adults infected. The Government have launched a national anti-retroviral programme with $100 million assistance from Merck and the Gates Foundation. My Department is supporting the national response as part of a regional HIV/AIDS programme. It includes support for the management of sexually transmitted infections, access to condoms, promoting behaviour change, and supporting non- governmental organisations including the Soul City media programme.

Gordon Prentice: That is encouraging news. When I was in Botswana last year, the Health Minister showed me sex education material that was being provided for schools. It was incredibly explicit—really "in your face" stuff. Yet, as my hon. Friend said, nearly 40 per cent. of the adult population are infected and life expectancy is now below 40. If that is happening in Botswana, which is a well-run, well-governed, relatively rich country, what is the prognosis for other countries in southern Africa where an AIDS pandemic is wiping out whole populations?

Sally Keeble: While there are major AIDS problems in Africa as a whole, Botswana is the worst-affected country in the world. Although it has some problems, it has two things going for it in terms of dealing with HIV/AIDS: a high level of political commitment and a high level of funding. It is trying to tackle both the need to lower the infection rate and the need to extend and improve the lives of the many people infected.

Caroline Spelman: I am sure that the Minister, like me, was shocked to note the collapse in life expectancy to—unless I am much mistaken—27.9 years in Botswana. A United Nations report predicts that up to 70 million people may die of the disease. Does she agree that at a time like this it is morally suspect that Britain recruits thousands of African nurses, including 100 from Botswana last year?

Sally Keeble: The hon. Lady is right to speak of the awful collapse of life expectancy, which will also have a long-term effect on the prospects of further development in Botswana.
	Of course the recruitment of professionals is a problem if there is a drain and they all come here, but there is also a much bigger issue. HIV/AIDS is affecting professionals disproportionately in Africa, including both teachers and health workers.
	A recent conference considered the way in which HIV/AIDS affects teachers. Teachers in southern Africa said that while there were problems over recruitment, they did not want their freedom of movement to be curtailed because they come from countries with a high incidence of HIV.

Chris McCafferty: Will my hon. Friend join me in congratulating the United Nations Fund for Population Activities on its excellent work on HIV/AIDS prevention and reproductive rights throughout the world? Should we not regret President Bush's disgraceful decision yesterday to end its funding?
	My hon. Friend is well aware of the report of the recent visit of Members of Parliament to China to observe the UNFPA's work there. Is she also aware of the subsequent visit and report of a Bush Administration team? Is she aware that both reports conclude—

Mr. Speaker: Order. I think the Minister now has enough to go on.

Sally Keeble: We are certainly aware of the issues raised by my hon. Friend, and will consider how we can make progress on this important matter.

Caroline Spelman: As the Minister has said, it is a hard fact that the levels of replacement of training for the professional classes are not keeping pace with the pandemic. It is also a hard fact that a teacher in a country such as Botswana would have to spend most of his or her salary to purchase anti-retroviral drugs, even at the subsidised rate. Does the Secretary of State support our call for the global health fund to be focused on the provision of free anti-retrovirals, especially for pregnant women to prevent maternal transmission?

Sally Keeble: Botswana has made the decision to provide access to anti-retroviral drugs, but it can do so for two reasons: it has the money and it has the health system. Some countries do not. The Government support appropriate national programmes, which may include the use of anti-retroviral drugs. In some countries there has been a high level of success, for example, in Uganda, Senegal and Brazil. Incidence rates have been stemmed and in some cases they have dramatically declined—for example, in Uganda, they are down from about 30 per cent. to about 5 per cent. That is the sort of progress we want in Africa and throughout the world.

Julian Lewis: What action her Department is taking to relieve the AIDS pandemic in Africa.

Clare Short: HIV/AIDS is deepening poverty in Africa and undermining development. It causes great human suffering and loss of life but also has deeply destructive economic effects due to loss of life and skills among the economically active generation and leaving elders and children unsupported.
	My Department committed £180 million in HIV and sexual health programmes in Africa last year. We also made significant contributions to the global health fund, which provides commodities for the treatment of HIV, tuberculosis and Malaria. We are supporting programmes to develop a vaccine and microbicide. Our work focuses on prevention, treatment and care.

Julian Lewis: The Secretary of State's record in trying to combat this catastrophe is second to none. Does she agree that even if there were unlimited quantities of anti-retroviral drugs, all the problems of expense were solved and they could be supplied free of charge in unlimited quantities, the main problem that Africa would still face would be distribution to the people who need them? What practical steps is she proposing to take to engage non-governmental organisations, international organisations and any other agencies in building an effective distribution system for those vital drugs?

Clare Short: I agree with the hon. Gentleman, except on one point—I do not agree that the provision of anti-retrovirals is the most important thing—the most important thing is prevention. Uganda needs to happen across Africa; its prevalence rate decreased from 35 per cent. to 5 per cent. That is a great achievement. Every country in Africa and, indeed, China and India need to achieve what has been achieved in Uganda.
	On the availability of anti-retrovirals, obviously people are morally entitled to them, but even at cost price they are very expensive. As the hon. Gentleman says, distribution systems are not in place so even if the drugs were free most people in Africa would not get them. They would need regular treatment, good food and a good quality of life because they are very toxic drugs.
	UNAIDS has a system whereby reduced price anti-retrovirals provided by the drug companies can be made available to countries. UNAIDS helps countries to make use of that provision; 13 have done so. We are busy trying to build basic health care systems for the immunisation of children and for other purposes across Africa. We must do that, but prevention, care and anti-retrovirals should be our order of priorities.

Peter Pike: I very much welcome all that the Government are doing in both west Africa and the whole of southern Africa, and obviously I fully support my right hon. Friend's comment that prevention is clearly the most important thing. Does she think that the ABC message that so many countries are spelling out—abstain, be faithful and use condoms—is a simple message? Does she also think that one of the difficulties in South Africa is that the president somewhat confuses the message? Should we not try to make him understand exactly what the problem is and spell it out clearly in South Africa?

Clare Short: I agree with my hon. Friend, except that the decision of the courts in South Africa that testing of pregnant women across the country to prevent mother- to-child transmission must be provided has solved the big row in South Africa, I am happy to say. It can now get on with rolling out an appropriate programme.
	We must all remember that the speed of the increase in infection is fastest in Russia. It is spreading quite rapidly in India and in China, although China is now taking action. It is a serious problem in the Caribbean. Africa's crisis is bad and more advanced than elsewhere, but there is a danger throughout the world. The Ugandan lessons need to be learned throughout the world. Infection rates must be brought down as rapidly as possible. This crisis goes beyond Africa, although it is hitting Africa hardest at the moment.

Jenny Tonge: One source of funding for the HIV/AIDS programmes in Africa is the World Bank's International Development Association loans. However, under the 13th replenishment, all loans for HIV programmes will be turned into grants. Is the Secretary of State not concerned that, in six months' time, the shortfall in the resources available for HIV/AIDS programmes, and for grants in particular, will be significant? Can she tell the House how that shortfall will be accounted for?

Clare Short: The hon. Lady is half right. The IDA loans—the most concessional arm of the World Bank—last for 40 years, and nothing is paid back in the first 10 years anyway. The big argument against turning part of the loans into grant was somewhat theoretical, and many who advanced it—most of whom were in the USA—did not understand how IDA worked. None the less, we have had to compromise, as one does. The grant element in the new programme has not been funded; it will bear down in years to come, not in six months. We pointed out in the mid-term review that we must cover that; otherwise, over time, the value of IDA will go down and down. However, it will take more than six months to have an effect.

Afghanistan

Linda Perham: What steps she is taking to support the Afghan Interim Authority in its efforts to meet (a) humanitarian and (b) longer-term needs.

Clare Short: Our objective is to help build a stable and secure Afghanistan with a growing economy and reducing poverty. Progress has been made, but the needs are massive and improved security is vital. There are still very serious problems with malnutrition. Afghanistan is one of the poorest countries in the world, with very high infant mortality rates. We are channelling humanitarian support through the appropriate agencies, and financial support through the Reconstruction Trust Fund. We are focusing our technical support on building capacity for economic management, a reformed security sector, and better livelihoods for poor people.

Linda Perham: I thank the Secretary of State for that reply, and for what she is doing. Does she agree that realising the rights of women is fundamental to the future of Afghanistan, and could she comment on what her Department is doing to support the women of Afghanistan?

Clare Short: I do agree. In Afghanistan as elsewhere, as Kofi Annan said so tellingly:
	"Poverty has a woman's face."
	Some 70 per cent. of the world's poor are women and their children. If we cannot educate girls and empower women, we cannot reduce poverty in the world. That is particularly true of Afghanistan, given the behaviour of the Taliban. Some very brave Afghan women made their contribution at the Loya Jirga by challenging the warlords. That showed the value of having those voices in politics. The schools are reopening and girls are teeming back to school, but it remains a desperately poor country with terrible malnutrition rates. Many children—I think one in four—die before the age of five, so we have a long way to go. Empowering women is a major part of the answer.

Robert Key: Has the Secretary of State tracked how much of the £200 million that she channelled from the taxpayer has been allocated to primary health care projects, particularly those relating to women's health issues? How much of it is being spent on practical infrastructure such as water, drainage, waste and refuse disposal, and electricity?

Clare Short: In fact, we have not allocated any of the £200 million. We have allocated £60 million since 11 September, but that was not part of the £200 million pledge. In the early stages, we are focusing on keeping the humanitarian effort going. Before 11 September, 5 million people a day were being fed by trucked-in food; now, that figure is 9 million. We must keep that effort going as we build up the capacity of the Afghan state to take forward self-government and self-empowerment. We also need order across the country, and the creation of a new Afghan national army—which can disempower the warlords and address their taxation of local people—is crucial to the creation of a united Afghanistan. We are making progress, but we have not made as much as we would like. There remains an awful lot to do.

Ann Clwyd: As my right hon. Friend knows, members of the International Development Committee will visit Afghanistan in October. When we were in Pakistan last year, we were told by the Pakistan Government that they were receiving insufficient help in respect of the tens of thousands of Afghan refugees in camps in Pakistan. What are we doing to help them? As my right hon. Friend knows, if the refugees return too quickly to Afghanistan, it simply will not be able to cope.

Clare Short: I am aware that three members of the Select Committee, including my hon. Friend, are going to Kabul. Unfortunately, it will not be possible to travel outside Kabul because of security concerns relating to other problems in the country. None the less, I hope that it will prove a useful visit.
	There are some 4 million Afghan refugees in Iran and Pakistan; in comparison, the numbers in countries such as ours are tiny. Through the UN system, we and others have been providing support, but life is tough in the camps, as my hon. Friend testified when she returned. A million Afghans have returned from Pakistan to Afghanistan, yet the situation is still bad, which shows how difficult life in the camps is. Support is being provided, but I strongly believe that no one should tell refugees when to return; they should decide themselves. If they decide that life is better in Afghanistan, we must help them to get home and to start to rebuild their lives.

Tony Baldry: Does the Secretary of State agree that there can be no long-term reconstruction in Afghanistan until the security situation improves? An enormous amount has been said about the fight against al-Qaeda, but the international community must not lose sight of the fact that there is an enormous way to go if the security situation in Afghanistan is to improve. The fact that, a year on, we are unable to move not simply beyond Kabul but beyond the boundaries of the UK embassy, is a demonstration of how much the situation must improve if there is to be any long-term improvement in Afghanistan.

Clare Short: I agree absolutely with the hon. Gentleman. Earlier there was talk of an international security assistance force going to all the main cities of Afghanistan, but it was decided that that was not to be done. If that is not to be done, we need to get on speedily—I agree that this should have started already—with building a national army and recruiting fighters who are currently paid by warlords into a national multi-ethnic army that can produce order throughout the country. We must also help to produce a proper tax system to provide revenue to the proper Government. I very much regret the delay in making progress on this and we must all do what we can to press the United States to help us to start to make progress.

Poverty Reduction

Andy Reed: What steps she is taking to monitor and improve poverty reduction strategies in countries receiving debt relief.

Clare Short: The UK worked hard to reshape IMF and World Bank relations with developing countries through the creation of the poverty reduction strategy process. This puts developing country Governments—[Interruption.]

Mr. Speaker: Order. There is far too much noise in the Chamber.

Clare Short: Thank you, Mr. Deputy Speaker.
	The process puts developing country Governments in the lead in bringing together economic policy and the distribution of debt relief, aid and local revenues in order to reduce poverty. The strategies are publicly debated and scrutinised before they are agreed. We are monitoring progress and believe that this approach is leading to improved economic management and social reform.

Andy Reed: Does my right hon. Friend agree that poverty reduction works only if it is not an accounting method, but improves the lives of the poorest in the countries involved? Does she agree that civil society must be involved in the production of those poverty reduction plans, such as in Uganda? Will she try her hardest to ensure that the World Bank and the IMF includes civil society in the outcomes of all poverty reduction plans, so that they make a difference to the poorest in the country and not just to the bankers and the leaders?

Clare Short: I agree with my hon. Friend that poverty reduction means improvements in people's lives. The shift of the measurement of progress by the IMF-World Bank programmes to poverty reduction means that they must focus on people's lives and not on some theoretical economic reform. That is one of the improvements that has been made. It is a requirement of poverty reduction strategies that they are openly debated with civil society. We must make sure that it is not just a few groups who are capable of applying to agencies such as mine for grants, but that representatives of the people, such as churches, women's organisations and village groups, can apply so that the real poor get a say in the priorities of their country. That is improving, but there is a way to go. [Interruption.]

Mr. Speaker: Order. I must ask the House to be quiet. There are hon. Members who are interested in this matter.

Vincent Cable: Does the Secretary of State agree that poverty reduction strategies can be severely compromised by arms export deals that entail debt obligations? As the Export Control Bill comes to the House for the last time this afternoon without a sustainable development clause, can she say what action she can take as a Minister to minimise the damage?

Clare Short: I agree with the hon. Gentleman. My aspiration is that we should learn the lessons of the Tanzania air traffic control case, whatever side of the argument one might be on. Such a contract will not be made again. We helped Tanzania to have procurement, financial management and scrutiny systems, and I am confident that those systems are now in place in Tanzania. The way in which we apply criterion 8—not giving a licence to something that would threaten the sustainable development of a poor country—must be tightened up and improved, and there has been an internal review.
	Personally, I do not think that we need the amendment—although I respect those who fought for it—to achieve a tighter and better application of the sustainable development rule. But I agree that that is what we should achieve, and then good will have come out of bad.

Tom Clarke: Does my right hon. Friend agree that the House will welcome the apparent easing of tension between India and Pakistan, but will be gravely concerned about the humanitarian problems in Bangladesh, in view of the flooding that has led to 1 million becoming homeless, affected 30 per cent. of the country and left 50 dead? Will my right hon. Friend continue her excellent efforts and encourage the European Union to emulate her actions?

Clare Short: I agree with my right hon. Friend that it is welcome that the tension has reduced between India and Pakistan. My right hon. Friend the Foreign Secretary has put a lot of effort into that. However, I do not think that the crisis is by any means over. We still have 1 million men on the line of control and elections are due on the Indian side of the line, in Jammu and Kashmir. If we have any crises, we could have an escalation, and then it could easily go nuclear. We should not take our eye off the danger there.
	I also agree with my right hon. Friend that Bangladesh copes enormously well with its floods, but it deserves more support and help because so many poor people there deserve a better chance in life.

Socially Responsible Behaviour

Dai Havard: What steps she is taking to support socially responsible behaviour by companies operating in the developing world.

Clare Short: We are strongly supporting initiatives to progress socially and environmentally responsible business practices, and many leading companies are committed to significant reform. Our largest UK initiative, which is supported by my Department, is the ethical trading initiative, which is a partnership of trade unions, development charities and British retailers with an annual turnover of £100 billion. Together, they are monitoring respect for core labour standards throughout their supply chains across the world. That is potentially an enormous force for good in poor countries.

Dai Havard: I thank my right hon. Friend for that answer. I especially welcome the establishment of the business partnership department in her Department and the appointment of a Minister for corporate social responsibility in the UK. What action will she take to ensure that her Department works closely with other Departments and the devolved Administrations and further develops relationships with the trade union and co-operative movement in monitoring—and developing—policy, activities for which that movement is well qualified?

Clare Short: I agree with my hon. Friend. In the past, funnily enough, we did not have a private sector department in my Department. A healthy private sector is crucial to the reduction of poverty, as is a healthy and effective government system. We are putting much more effort into that area. I can confirm that we work strongly across UK Departments because we want to be part of a Government who are committed to sustainable development across the world, not just one Department in the Government. We have partnership programmes with the Transport and General Workers Union on shop steward education. We are about to organise a programme with the Trades Union Congress, and we are trying to deepen the understanding of development in all sectors of British society so that we can make a better contribution.

Heavily Indebted Poor Countries

Desmond Swayne: If she will make a statement about her policy on the provision of aid towards heavily indebted poor countries.

Clare Short: There are 37 countries that are eligible to qualify for debt relief under the heavily indebted poor countries initiative, because they are so heavily indebted that their debt can never be paid and is creating a barrier to reform. Some 26 countries have qualified and receive $62 billion of debt relief. The process has led to improved economic management and increased social spending. The remaining 11 countries have serious problems of conflict or bad government, but we hope to make progress with them, too.

Desmond Swayne: I thank the Secretary of State for her answer. Does she agree that improvements in trading arrangements for those countries will be of much greater benefit than any direct aid that can be given? What is she doing to improve the rules that govern world trade to the benefit of those nations?

Clare Short: I agree with the hon. Gentleman that improved trading opportunities for poor countries are crucial to their economic growth, which is essential to the reduction of poverty. I do not agree that improved trading opportunities are an alternative to aid. Aid to help countries build up the capacity of their Government systems, increase their capacity to negotiate trade agreements, and have a thriving private sector that can take up those opportunities is also key. We are doing what was agreed at Doha. A deal was agreed that would really enhance the training opportunities of developing countries; now we must ensure that that is delivered.

PRIME MINISTER

The Prime Minister was asked—

Engagements

Matthew Green: If he will list his official engagements for Wednesday 24 July.

Tony Blair: This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further such meetings later today.

Matthew Green: With hours to go before the summer recess, the Prime Minister may be aware that some Members may be planning to take holidays in Florida. Despite the Prime Minister's dangerously close relationship with President Bush, does he think, in the light of yesterday's shuffling of the deckchairs on the Titanic by the Conservative leader, that Florida is still a safe place for British politicians to go, and should they take their mobile phone?

Mr. Speaker: Order. The question is out of order. John Mann.

John Mann: A recent internet poll suggested that few or no young people were using heroin in Britain—well, they obviously did not poll anybody in my constituency. If it can be shown that there is a particular problem with heroin abuse in former mining villages, will the Prime Minister look at finding additional resources to tackle that problem?

Tony Blair: I shall certainly look into the point that my hon. Friend makes. I think that he knows that a lot of money is going in, through the new deal for communities for example, to regenerate former mining communities. Part of that money is put into the community infrastructure, and obviously some of that can be used to help tackle problems of drug abuse, which, as my hon. Friend rightly points out, are not confined to the inner cities but are in parts of our rural and former mining areas as well.

Iain Duncan Smith: No doubt the Prime Minister will already have seen today the report of the all-party Select Committee on Defence, on domestic preparedness, in which the Committee says in the conclusion that
	"the Government has"
	not taken the
	"opportunity to conduct a proper and comprehensive examination of how . . . the UK . . . would manage the consequences of a disaster on the scale of 11 September."
	Does the Prime Minister agree with that?

Tony Blair: We shall obviously make a full and detailed response to the Defence Committee report, but I do not accept that we have not made the most urgent preparations following 11 September. Indeed, the report begins by saying:
	"Since 11 September . . . much has been done to strengthen the UK's defence and security against the terrorist threat."
	We shall, of course, study carefully the additional things that the Committee says that we should do.

Iain Duncan Smith: The Prime Minister is right; the Committee does not take issue with the fact that there has been work done, and much good work too. But the Select Committee did go on to say—this is the critical bit—[Interruption.] A lot of it is quite critical, but this is very critical. It says that
	"a great deal of"
	work
	"has been expended . . . without clear strategic direction. It seems to us that, in many areas, the Government has confused activity with achievement." Surely the Prime Minister can see the relevance of that, and hopefully he will agree with that particular conclusion.

Tony Blair: What we have done is that all the emergency services have reviewed their capabilities. A massive amount of training of police officers, ambulance staff and people in the health service has gone on to ensure that we are prepared. In addition, just within the last year we have allocated from the reserve about £250 million extra for all sorts of things from the Ministry of Defence through to the Metropolitan police and to strengthen the UK's anti-terrorist-financing regime. So an awful lot has been done, but of course we shall consider carefully what further suggestions the Defence Committee made.

Iain Duncan Smith: The point about the Select Committee report is that, as the respected Labour Chairman of the Committee, the right hon. Member for Walsall, South (Mr. George), said on the media,
	"there has been a lack of grip and direction"
	from the Government on this matter. The crucial point is not that there has been activity but that, as they said, it is a mistake that activity supplants real direction and real drive. So will the Prime Minister, to reassure the country, which will rightly be concerned, now take personal charge to ensure, as the Committee says, that there is adequate "central co-ordination and direction", and bring it under his control, not leave it to others to war and fight with one another?

Tony Blair: Of course, as Prime Minister I am always ultimately responsible for making sure that these things are done properly, but the whole purpose of setting up the civil contingencies secretariat and the recent appointment of Sir David Omand as the permanent secretary to co-ordinate the security and intelligence work was so that we brought together the various bodies and made sure that we had the best possible preparations for whatever potential terrorist attack we may be facing.

Iain Duncan Smith: It is not happening.

Tony Blair: The right hon. Gentleman says that it is not happening; it is happening actually, but of course we have to make sure that we try to do everything that we can to strengthen that capability. I would say to him that—although he says that the activity is there, but not the actual direction—the money, for example, that we have allocated to the Ministry of Defence or to the Metropolitan police is precisely for real activity on the ground to strengthen our defences against whatever might be done. But I hope that he would ultimately agree with me that the best defence is, in fact, what happens with our security and intelligence services. For that very reason, the intelligence agencies will increase their spending by 6.4 per cent. in real terms annually.

Iain Duncan Smith: I support that.

Tony Blair: I am delighted that the right hon. Gentleman supports that. We can add that to the list of the spending that he does support. It is important to make sure that we have the best possible security and intelligence capability, recognising as I think everyone does post-11 September that there is a limit to what we can do. As I said in front of the Liaison Committee a short time ago, we are in a dilemma between protecting ourselves against every potential threat and possibly spending millions or billions of pounds to do so, and making no proper preparations at all. We believe that we have got the balance right, and with the additional appointment of a specific permanent secretary to co-ordinate this issue right at the heart of Government, we have done as much as we possibly can at this stage, but we will consider carefully the specific recommendations of the Committee.

Chris McCafferty: Following the publication of Dame Janet's interim report on Harold Shipman last Friday, will the Prime Minister join me and other hon. Members in expressing sympathy and support to the victims' relatives? Does he also agree that the failure of the General Medical Council to strike off Harold Shipman following 77 counts of drug misuse and prescription fraud in my constituency led to many more deaths in Hythe? May I ask the Prime Minister to take a personal interest in the final report when it is published in the autumn and to expedite the recommendations as urgently as possible?

Tony Blair: Of course we should study carefully and learn the lessons of the inquiry report, and I join my hon. Friend in expressing our deep sympathy to the families of all those who lost their loved ones as a result of the murderous activities of Harold Shipman. I am sure that the General Medical Council and everyone will try to learn the lessons that the inquiry has established for us. I would just like to say at the same time as mentioning the horrific case of Harold Shipman and all the evil that he did that it is worth paying tribute, however, to the vast majority of our general practitioners who do excellent work for our constituents up and down this country.

Alan Beith: In the very happy absence of my right hon. Friend the Member for Ross, Skye and Inverness, West (Mr. Kennedy), who did not need to leave a phone number, may I ask the Prime Minister about the fact that the Chancellor announced a major increase in the ability of central Government to take over local services last week? Failing schools will be taken over. Poorly performing social services departments will have new managers sent in. Failing local authorities will be taken over. The Home Secretary wants to do the same to the police. Is the Prime Minister not worried that those powers will destroy accountability to the local electorate and stifle local initiative?

Tony Blair: First, perhaps on behalf of the House, may I send congratulations to the right hon. Gentleman's right hon. Friend on his marriage and best wishes for his honeymoon?
	Secondly, we have in fact devolved more money to front-line schools and devolved a greater percentage of their budget for them to spend, but I make no apology for saying that, where schools are failing, it is important that there is intervention because every single failed school means that children in that school are being deprived of the chance of a decent education.

Alan Beith: Bearing in mind the devastating criticisms made in the Anderson report into the foot and mouth outbreak about the performance of the Ministry of Agriculture, Fisheries and Food and the Department for Environment, Food and Rural Affairs and the fact that DEFRA has failed to meet 83 per cent. of the performance targets set for it by the Government, can the Prime Minister tell us who takes over a failing central Government Department?

Tony Blair: I do not accept what the right hon. Gentleman says about DEFRA—[Interruption.] From that cheer, perhaps he will be doing rather more of these Question Times in future. On the DEFRA targets, he is wrong; it is not the case that 83 per cent. of them have not been met. It is precisely because of the problems that were associated with foot and mouth that we set up the civil contingency secretary and that we changed the Ministry of Agriculture. As my right hon. Friend made very clear, we accept responsibility for the mistakes that were made. Let us be clear, however: we managed to get rid of this outbreak within six months—less time than the 1967 outbreak—even though it was the worst outbreak that this country or any country had known. I hope, at least, that the right hon. Gentleman will accept that there were many people, not least in the Army and in the Ministry of Agriculture, who worked extremely hard to bring the epidemic under control.

Peter Kilfoyle: In the eventuality of the United States commencing military action in the middle east during the recess, will the Prime Minister undertake to recall the House before any British forces are committed?

Tony Blair: I have to say that we have not got to the stage of military action. If we do get to that stage, at any point in time, we will, of course, make sure that Parliament is properly consulted.

Northern Ireland

Lady Hermon: When he next plans to visit Northern Ireland.

Tony Blair: I have no immediate plans to do so.

Lady Hermon: I thank the Prime Minister for that response. Obviously, the people of North Down will be disappointed that he is not coming there on his holidays.
	The Prime Minister will recall that, when he last came to Northern Ireland, he took responsibility for laying down clear principles for those who are moving from violence to peaceful democratic means. He also gave an undertaking that he would spell out the consequences for those who did not abide by those principles. Republican violence has continued, and loyalist violence has continued, including the appalling murder of a young Catholic this week. Will the Prime Minister please tell the House what the principles are and what the consequences are of breaches of those principles?

Tony Blair: The hon. Lady is absolutely right to raise this issue. My right hon. Friend the Secretary of State for Northern Ireland will make a statement in great detail on this later today. With your permission, Mr. Speaker, I will give a more extended answer than I would do normally.
	We all signed up, in the Belfast agreement, for a transition from violence to democracy in Northern Ireland. We did not expect it to happen overnight, but neither is it acceptable that this transition should now stall. Now, more than four years after the agreement was signed, it is increasingly urgent that it should be clear that paramilitary organisations are not engaged in any preparations for terrorism and that they should be stood down altogether as soon as possible.
	It is also intolerable that paramilitaries should have played a part in recent sectarian disturbances, which have brought localised violence to the streets of Belfast and elsewhere, including the shocking murder of Gerard Lawlor to which the hon. Lady referred. These disturbances call for and will be met with a strong and effective security response. My right hon. Friend will spell that out in his statement later.
	It is no longer sufficient just that there should be no terrorist violence. We have to be clear that preparations for violence have also ceased. My right hon. Friend will make it clear that, in reviewing the ceasefires, he will give particular weight to any substantiated information that a paramilitary organisation is engaged in training, targeting, acquisition or development of arms or weapons, or any similar preparations for terrorist violence in Northern Ireland or elsewhere.
	We should not forget the enormous benefits that the agreement has brought to the people of Northern Ireland. All of us have a lot to lose if it fails. If, however, there are in future such fundamental breaches of the commitment to exclusively peaceful means, they will be taken into account in assessing the ceasefires. It is right that, with the passage of time, these judgments should become increasingly rigorous.

Eddie McGrady: Does the Prime Minister agree that the credibility of the Government has been greatly weakened by their equivocation in attributing violence to particular paramilitary organisations? Could I advise that he calls the sheet absolutely clean to give confidence to the communities of Northern Ireland, particularly those communities that are under siege at the moment, night after night, especially in north and east Belfast? They need protection, assurance and some understanding that their plight is recognised and will be addressed as a matter of grave urgency.

Tony Blair: I understand exactly what my hon. Friend says. It is for that reason that my right hon. Friend the Secretary of State will make a statement later today. I hope that what he says will go some way to convincing my hon. Friend and other hon. Members that we intend to take very seriously what are appalling breaches of security at the moment. The truth is that, for many people in Northern Ireland, the agreement has brought enormous benefits. I know that my hon. Friend believes that, and so do his constituents. However, there are people in north Belfast, east Belfast and elsewhere for whom the whole concept of a peace process must seem very far away indeed. We must make sure that the small number of paramilitaries on both sides do not wreck what is the one decent chance for a good future for Northern Ireland that we have.

Peter Robinson: Does the Prime Minister recall using almost precisely the same terminology in an article in the Belfast News Letter on 22 May 1998 when he was campaigning for a yes vote in the referendum? Four years of violence from the Provisional IRA has not seen any action from him whatever. Would he take the word of a serial promise-breaker if he were a Unionist in Northern Ireland?

Tony Blair: First, I do not accept that nothing to the good has happened in the past four years. I do not accept either that nothing has happened on the republican and IRA side. There have been significant steps forward. However, I also accept—this the purpose of what I have said today and of the statement by my right hon. Friend the Secretary of State—that it is not enough for people simply to be on ceasefire and think that there is some tolerated level of violence. It cannot be tolerated; no level of violence can be tolerated.
	People in the House will remember that there have been times when the whole process has been disturbed and even times when the Executive bodies in Northern Ireland have had to be suspended as a result of the difficulties in making the transition. However, I say to the hon. Gentleman and to the colleagues in his political party that I still believe that the Belfast agreement in 1998 represents and continues to represent the best chance of a peaceful future. Let us be clear. The terrible things that are happening in north Belfast at the moment have been happening for a long time in Northern Ireland—for far too long. Associated with them are a whole lot of other acts of violence. We have now made substantial advances in Northern Ireland and I will defend this agreement to the utmost, because it has given people in Northern Ireland a chance for the future. However, I accept entirely—that is why we have to return to the issue again today—that there cannot be some accepted level of paramilitary violence on the ground. Ordinary, decent, law-abiding people in Northern Ireland—that is the vast majority, whether they are nationalist, Catholic or Protestant—have to be protected, and that is why we will adopt the measures that we will set out later today.

Engagements

Roger Casale: Does my right hon. Friend agree that it will be a bad day for English football when Wimbledon FC is moved to Milton Keynes? Is not the best way to harness football's potential for good in our society by strengthening, and not by severing, the links between football clubs and their local communities? Will he do what he can to make sure that no new public money is given to sponsor the move to Milton Keynes? Any such money should go to the newly formed AFC Wimbledon which may, one day, find its way back to Wembley as well as finding its way back to Plough lane. [Interruption.]

Tony Blair: Opposition Members may complain, but I recognise a Member of Parliament with his finger on the pulse about the things that matter to his constituents. It is not my decision as to whether Wimbledon FC moves to Milton Keynes, but I pay tribute to the stoicism and determination of the club's supporters, who have been stoical and determined through some difficult times.
	My hon. Friend asked what we can do. We can put more money into grass-roots football and sport, and that is what we are doing—£62 million to be precise along with the Football Foundation and others. That is an important contribution to allowing clubs, such as Wimbledon, to thrive.

Iain Duncan Smith: I welcome what the Prime Minister said about Northern Ireland, but I hope that the Secretary of State will spell out without obscurity the clarity of the new action that the Government will be prepared to take to deal with those who commit terrorist acts.
	On the subject of education, in 1998, the Government limited the right of schools to exclude disruptive pupils. Since then, there have been four times as many assaults on teachers. Does the Prime Minister accept that undermining the right of head teachers and schools to deal with disruptive pupils has plunged them into serious difficulty?

Tony Blair: I do not accept that. We have made it very clear to head teachers that they have and must have the absolute right to exclude pupils, particularly for violent assaults upon teachers. We have made sure that that message is understood by schools. I do not accept what the right hon. Gentleman says.

Iain Duncan Smith: The Prime Minister knows very well that head teachers find it impossible to deal with disruptive pupils because they have been undermined by appeals panels. Eight out of ten teachers now say that they have been physically threatened by pupils, and a third of all teachers have had to deal with offensive weapons in the classroom. Does not the Prime Minister see the obvious connection between his decision in 1998 to undermine head teachers' powers and the terrible problem that now exists for teachers in schools?

Tony Blair: I do not accept that we have undermined head teachers' ability to take action against pupils who are violent towards teachers. That is complete nonsense. We have always made it clear—and let me make it clear again now—that of course head teachers must have, and do have, the power to exclude pupils who have been violent towards their teachers. Violence against teachers should not be tolerated in any shape or form. Importantly, as a result of the measures that we have taken and the investment that we have put in, we are ensuring that pupils who are permanently excluded receive full-time education—as opposed to the situation that we found in 1997 whereby they would end up with perhaps a couple of hours schooling a week, then be out on the street. That is the right thing to do, and we will extend it to temporary exclusions as well. In my view, the most important thing is not just to give teachers protection against violence, but to ensure that pupils who are excluded are not out on the street, but in full-time education.

Iain Duncan Smith: The fact is that as a result of the Government's action fewer pupils are being excluded. A third of all decisions by appeals panels now go against schools. In a recent case, it cost £10,000 for the school concerned to fight the appeals case. Many schools will not even take cases to appeals panels because they cannot afford to. We know that half the teachers who leave the profession do so because of poor discipline. In a recent trade union report, a teacher is quoted as saying:
	"I am leaving the profession. I love teaching and I am good at it, but it is getting far too dangerous."
	Surely the Prime Minister can understand that if he prevents head teachers and governors from having the power to get rid of disruptive pupils, they will be undermined and teachers will fail to teach in the classroom.

Tony Blair: Let me repeat to the right hon. Gentleman that of course head teachers have the power to exclude disruptive pupils who are violent against their teachers, and that happens. Where head teachers take that action, we support it and support it fully. We have made that clear on every occasion.
	As for the numbers of teachers leaving the profession—yes, it is true that teachers have left as a result of discipline problems in the classroom. That is precisely why my right hon. Friend the Secretary of State for Education and Skills announced the measures that she did. Let us be clear that as opposed to this time last year—never mind five years ago—there are 9,500 extra teachers in our schools. What is more, as result of major investment there has been the biggest increase for many years in the number of teacher trainees. Again as a result of investment, we are providing pupils who are excluded with the proper schooling that they never used to get. That is all down to the investment that we are putting in, which helps teachers in our classrooms. It is investment that we are committed to, and investment that the right hon. Gentleman is not committed to. I therefore suggest to him that over the holiday period—I recommend that he does not spend it in Florida—he decides to come back in September and agree to the investment programme in schools, hospitals and elsewhere, because if we want to put our public services right, cutting the money that goes to them is not the right way to do it.

Diane Abbott: The Prime Minister will be aware of the concern throughout the country that by the time the House returns in the autumn we will be at war with Iraq. [Interruption.] Hon. Members may groan, but many millions of people are concerned. Does he take seriously the view, which was most recently expressed by the new Archbishop of Canterbury, that it would be wrong to go to war with Iraq without a fresh and distinct UN mandate?

Tony Blair: As I have made clear on many occasions, the position set out by my right hon. Friend the Foreign Secretary is right, in that whatever action we take must be legally justified, and we will ensure, if we get to the point of action, that it is. However, I reiterate what I said a moment ago: we have not yet reached the point of decision, and should we do so, of course the House will be properly consulted. People are perfectly entitled to express their views on these issues. But my view remains that weapons of mass destruction are a serious threat, and it is important that we deal with it. How we deal with it is an open question. If decisions are taken, there will be ample opportunity for the House to be consulted.
	We cannot have a situation where Iraq continues to develop weapons of mass destruction. In respect of UN resolutions, I simply point out to my hon. Friend that the UN has passed 27 resolutions on Iraq and its programme for weapons of mass destruction, and Iraq is in breach of almost every one.

John Baron: Given that the Deputy Prime Minister is about to force an extra 200,000 houses on local communities in the south-east, when my constituency's infrastructure is already overstretched, does the Prime Minister accept that in a truly democratic society, local people should decide the right level of local development, not politicians sitting in Whitehall?

Tony Blair: Of course the views of local people are extremely important, but I hope that the Conservative party realises that in circumstances in which it is necessary to develop housing in the south-east, but in a manner consistent with the split between brownfield and greenfield sites and with the preservation of the green belt—which we have increased by some 30,000 hectares since we came to power—it is important to try to balance concerns. That was precisely the reason for the Deputy Prime Minister's statement. I appreciate that the hon. Gentleman has his constituency angle, but the Opposition do themselves no favours by pretending that this is not a serious issue that has to be addressed.
	When my right hon. Friend made his statement last week, he stated the situation correctly. The House should understand that we have to deal with this problem. How it is dealt with should be a matter for debate, but it is not responsible of the Conservative party, even as an Opposition, to pretend that there is not a problem that needs to be dealt with.

Hugh Bayley: Although many areas in the north of England face the serious problem of low demand for social housing and abandonment by existing tenants, there are a very few authorities in the north which face higher rising house prices and lengthening waiting lists than the south. In the City of York, house prices and rents have risen by 20 per cent. in the past year and homelessness has risen by 60 per cent. Will the Prime Minister have a word with the Deputy Prime Minister and ask his Department to consider whether those few authorities in the north could be treated in a similar way to authorities in the south which face the same problems?

Tony Blair: My hon. Friend makes the entirely sensible point that not all local authorities in the north are in the same position. He will know that the Deputy Prime Minister is due to make a statement on these issues in the autumn, and I have no doubt that he listened carefully to what my hon. Friend just said.

Cheryl Gillan: Can the Prime Minister tell me the average level of NHS funding for children's hospices and how much his national insurance rise will cost them?

Tony Blair: I do not have those figures, but I shall certainly send them to the hon. Lady. However, I am sure that she will agree that the investment in the NHS, whether in the hospice movement or elsewhere, is important. It is important for hospices because the greater the ability of the NHS to cope, the less the pressure on the hospice movement. That is why I should have thought that if the hon. Lady wanted to raise this issue, she, unlike some of her hon. Friends, would have at least supported the additional money going into the health service.

Tam Dalyell: Will the consultation with the House of Commons to which the Prime Minister referred in his answers to my hon. Friends the Members for Liverpool, Walton (Mr. Kilfoyle) and for Hackney, North and Stoke Newington (Ms Abbott) take place before or after the commitment of British forces to military action in Iraq?

Tony Blair: As I have already said, we have not taken the decision to commit British forces. When that decision is made, we will consider the best way to consult the House in the normal way and in the normal circumstances.

Geoffrey Clifton-Brown: The Prime Minister will recall that on 3 July at column 222 of Hansard I asked him whether he would review the working of the Care Standards Act 2000, which has led to the closure of 47,000 beds. He refused. Yesterday, his Secretary of State for Health reversed that policy. Will the Prime Minister now apologise to all those elderly people who have suffered because their care home has closed?

Tony Blair: We have listened to the concerns expressed; the hon. Gentleman should be pleased about that. As for saying that 47,000 places have closed because of the regulations, that is complete and total nonsense. Yes, it is important that we deal with the regulation issue, but that is not the only problem that care homes face. As they said yesterday, they also face the problem of low fees. That is why we have increased by 6 per cent. in real terms the funding that goes into local authority social services. It is complete hypocrisy and opportunism on the part of the Conservative party to complain about the closure of care homes when it opposes the investment that those homes need.

Northern Ireland

John Reid: With permission, I wish to make a statement—[Interruption.]

Mr. Speaker: Order. Will hon. Members please leave the Chamber quietly?

John Reid: After the meeting that my right hon. Friend the Prime Minister and the Taoiseach had with the parties at Hillsborough on 4 July, he said that we would reflect on what had been said about continuing levels of violence in Northern Ireland and consider what could be done to restore confidence in the political process.
	As my right hon. Friend said, there can be no acceptable or tolerable level of violence. The principles of democracy and non-violence, which were laid down by the international body under Senator George Mitchell in 1996 and formed the basis on which the political negotiations took place, are as relevant now as they were then. As a signal of shared purpose in eradicating violence, I have today written to all the parties asking them to reaffirm their total and absolute commitment to those principles.
	In recent weeks, in particular over last weekend, we have seen serious disturbances that have brought violence to the streets of Belfast and elsewhere, culminating in the appalling murder of Gerard Lawlor by so-called loyalists early on Monday morning—a young man who was barely in his teens when the peace talks started, and not out of them when his life was so cruelly taken. I am sure I speak on behalf of the whole House when I send our sympathy and condolences to his family and our deep regrets to all the families of the injured and murdered in Northern Ireland. [Hon. Members: "Hear, hear"] That was not an isolated incident. Over the previous 72 hours, there had been five attempted murders, eight shootings and five other violent attacks. Those disgraceful events benefit no one, and have been a source of anguish to victims, families and all those who live in the areas concerned.
	I said recently that we would oppose by all means those who remain wedded to violence. The security forces are bearing down on the paramilitaries to deny them the freedom to operate in order to prevent murders, shootings and pipe and petrol bomb attacks. More than 250 additional police officers and soldiers have been brought in to dominate the interfaces in north Belfast. They are stopping and checking the movement of individuals and vehicles to prevent armed gangs entering and leaving the area. Known paramilitaries are being kept under close surveillance.
	This means that more police and Army resources are now deployed in north Belfast than at any point since the beginning of the ceasefires in contrast to routine patrolling elsewhere in Northern Ireland, which has been dramatically reduced. The Police Service of Northern Ireland is pursuing a variety of proactive and reactive methods to disrupt paramilitary movement in the area. I am sure that the House will give its total support to the arduous and courageous task that it is fulfilling.
	Since violence flared in Belfast at the beginning of May, the police have made a number of arrests of terrorists, and for public order offences ranging from riotous behaviour to possession of petrol bombs. Since 4 May, in north and east Belfast, 21 loyalists have been arrested, with 15 charged. Over the same period, 12 republicans have been arrested and all were charged.
	The police are determined that the perpetrators of the violence should be brought to book and will pursue them by every means available to them. I share that aim. I have asked my noble Friend the Attorney-General to lead an examination of police powers, bail arrangements and the scope for additional criminal offences. He will also examine whether any changes in the criminal law could be made to facilitate successful prosecution for acts of terrorism, violence and organised crime. All that would complement not only the enhanced activity of the police and the Army, but the Proceeds of Crime Bill, which we hope will receive Royal Assent today and which will give us a powerful weapon to hit paramilitary finances and the greed of individuals.
	However, security measures alone will not solve the problem. That is why I also said recently that we would work in partnership with those who wanted to engage in local dialogue. Following the meeting at Hillsborough, I met several of the political parties, and encouraged closer and more systematic dialogue at local level.
	In the light of recent events, at my request, the Under-Secretary of State for Northern Ireland, my hon. Friend the Member for Kilmarnock and Loudoun (Mr. Browne), has initiated further urgent discussions with local representatives, including those with links to paramilitary organisations, in an attempt to develop the kind of local partnership structures that will help prevent such disturbances in future. We are willing to spend as long as it takes with those who want to work in partnership with us and with each other. Those who do not want to do so should face the full force of the law.
	I cannot emphasise too strongly that it is essential now that things should calm down, and that we should have a settled summer. It would be intolerable for the political progress on which the future well-being of Northern Ireland depends to be held to ransom by the murderous activities of paramilitaries of either side. It would be equally intolerable if the progress valued by the many in Northern Ireland were to become hostage to the few who are still committed to violence.
	People want us to face up to these problems honestly. It would, I believe, help us and the public in Northern Ireland to have more transparent information about the involvement of paramilitary groups in such activities, and the general pattern of paramilitary activity in the community. On the related area of the involvement of paramilitaries in racketeering and organised crime, I have already asked Professor Ron Goldstock to assist me in assessing the scale of the problem. He brings to that task his experience as a former head of anti-organised crime activities in New York state.
	I can see a case for doing something similar, to shine a light on levels of paramilitary violence in the community, both loyalist and republican, and to supplement the judgments that I make about the ceasefires. I will consult widely about the idea and how it might best be done, and make my views known after the summer break.
	It is now four and a half years since the second IRA ceasefire. The ceasefires have made a huge contribution to political progress in Northern Ireland in addition to reducing the appalling human cost of the conflict. This is the 30th anniversary of the worst year of the troubles, when 470 people lost their lives. Even 10 years ago, the annual figure was nearly 100. Last year it was 16; so far this year, six people have lost their lives. We should never forget in the midst of all the problems that we face, and in all our debates in Parliament, just how far we have come. Nevertheless, six is still too many. Of course things are a lot better than they were, but that is not the only test. The real test is whether things are as good as people in Northern Ireland have a right to expect them to be.
	The people expect of all paramilitaries and all parties that they contribute to improvement, but there is a particular responsibility on any party participating in the government of Northern Ireland. They must appreciate that operating jointly in government, as the agreement requires, calls for a measure of responsibility and trust, and trust depends on confidence that the transition from violence to democracy continues apace, has not stalled, and will be completed without delay.
	The recent statement by the IRA acknowledging the grief and pain of the relatives of those who died at the hands of the IRA—

David Burnside: Non-combatants.

Mr. Speaker: Order.

John Reid: That statement, which also reaffirmed the IRA's commitment to the peace process, was a welcome step in the right direction. There may be those hon. Members who reject any overture of any nature, but I think that it would be unwise of the majority of us to do so. However, we also have to acknowledge that more than four years after the agreement was concluded, welcome though it is, it is simply not enough for paramilitary organisations on ceasefires to have brought an end to their terrorist campaigns.
	Confidence in the process requires confidence that there will never again be a return to those dark days, in particular that preparations are not going on under the surface for a resumption of a terrorist campaign, and that paramilitary organisations will be stood down altogether as soon as possible. Whatever their real intentions—and in the case of the IRA I share the assessment of my right hon. Friend the Prime Minister that it has never been further from a return to its campaign—nothing could be more damaging than the sense that the options were being kept open in that way.
	The judgments I make about ceasefires have to be made in the round, taking account of all relevant factors, including those which the statute obliges me to take into account. That is what I will continue to do, but with the passage of time it is right that those judgments should become increasingly rigorous. In reviewing the ceasefires, I will, as the Prime Minister said, give particular weight to any substantiated information that a paramilitary organisation is engaged in training, targeting, acquisition or development of arms or weapons, or in any similar preparations for a terrorist campaign in Northern Ireland or elsewhere. I say to the House, lest there be any doubt on the matter, that I will not hesitate to use the powers Parliament has given me if the circumstances require it.
	There is also still a threat from organisations, both loyalist and republican, that are not on ceasefire. The Irish authorities have already had some notable successes against the dissident republicans. Separately and together, we will continue to counter those who cling to violence, using all the resources at our joint disposal.
	I hope that I have made it absolutely clear that violence is unacceptable. This is not the first time that I have said that, but I repeat it lest there is any illusion in any quarter. I pledge once again that the Government will do all in our power to achieve the elimination of violence, but I will not pretend to the House that it is within the Government's power to solve all the problems on our own, or by security measures alone.
	That is why we must keep in mind the enormous benefits that the political agreement has brought and will continue to bring as we contemplate its implementation. Those benefits include government of Northern Ireland by the people of Northern Ireland, with local elected representatives in a cross-community Administration.
	The stability of those institutions is not a concession to paramilitaries or paramilitarism. On the contrary, it provides a platform for putting their activities in the past, where they belong. The steps that I have announced today [Hon. Members: "What steps?"] are most definitely not intended to threaten the democratic institutions, but to buttress democracy against violence. We should never forget how much we have to lose, and it is essential that the political representatives on all sides who have done so much to create and sustain the agreement should, by reaffirming and observing their commitment to exclusively peaceful and democratic means, ensure its continuation.
	I have, despite the interjections, set out a range of measures in response to the violence in Northern Ireland. However, the success of the peace process will require courage, patience, endurance and a willingness to compromise from everyone involved. It will be a long and, at times, a difficult haul, but that could not be otherwise in what is an historic attempt to end what is at heart an ancient conflict.

Quentin Davies: I thank the right hon. Gentleman for his courtesy in letting me have a copy of his statement just before Prime Minister's questions. I fully associate myself and the entire Opposition with his comments about the appalling cold-blooded murder of Gerald Lawlor, and the other acts of violence that the right hon. Gentleman has listed. The statistics that he has given the House give us a clear impression of the depth of the crisis that we face. None of us should have any illusions about that.
	Precisely for that reason I want to make a desperate effort to be as positive as I can in responding to the Secretary of State. Nevertheless, will he accept that I cannot in all honesty avoid expressing the profound sense of disappointment that I feel, and I believe so many people will feel in Northern Ireland, throughout the rest of the country, in the Irish Republic, in the United States and elsewhere, at the extraordinary vacuousness of the right hon. Gentleman's statement.
	The statement was full of fine words with which no one would want to disagree for a moment, but in terms of actual decisions or action, the bravest thing that the right hon. Gentleman seems to have done this afternoon was to repeat words which the Prime Minister used four years ago, and to say that he might in certain circumstances be prepared to use powers that he has never used but which have been available to him for four years.
	I shall remind the House of what the Prime Minister said on 14 May 1998 at Balmoral by way of defining the ceasefire and the agreement. He said that the ceasefire would be
	"an end to bombings, killings and beatings, claimed or unclaimed; an end to targeting and procurement of weapons; progressive abandonment and dismantling of paramilitary structures actively directing and promoting violence"
	None of those things has happened. What is more, there have been spectacular breaches exactly of the sort that the Prime Minister mentioned—targeting, for example, and procurement of weapons. Nothing whatever has been done about it by the Prime Minister.
	The Prime Minister said four years and two months ago in Belfast on the same matter—exactly the same words were used this afternoon—
	"These factors provide evidence upon which to base an overall judgment—a judgment which will necessarily become more rigorous over time."
	It has not become more rigorous over the past four years. We can only pray that the Government will genuinely now become more rigorous at the eleventh hour. It is indeed the eleventh hour.
	We welcome any improvements in police powers, in bail arrangements and in increasing the number of available criminal offences for the police to use against perpetrators of violence. However, may I again say how disappointed I am that after all this time, after several weeks of hype—Hillsborough, before Hillsborough and after Hillsborough—all that the Secretary of State can do is to promise to look at these matters. Even these matters are not promises.
	If the right hon. Gentleman really wants to do something to improve policing and law and order in Northern Ireland, would it not be a better idea to accept the proposal that I put to him last Tuesday in our debate, that the Government should make a commitment to prevent police numbers falling further? Police numbers are falling the whole time. Would it not be a better idea to remove the uncertainty surrounding the future of the full-time police reserve in Northern Ireland, by making a commitment to continue with that reserve as long as is necessary?
	On the vital matter of the peace process, on which all our hopes for the future of Northern Ireland depend, does the right hon. Gentleman accept that there will be profound disappointment that all he said was that in future he would not hesitate to use powers that he has had and never used, despite blatant abuses of the ceasefire and breaches of the agreement? Does he not owe the House an explanation of why he did not use those powers when there were spectacular breaches, such as Florida, the FARC and Castlereagh, to name three? Does he accept that he has a real credibility problem, and that the only way he can overcome it is to answer clearly now the questions that his statement this afternoon raises?
	First, what criteria will the Secretary of State use in future to trigger those powers? Will he accept the Chief Constable's determination that a breach has occurred? So that there is no doubt in the mind not only of the House, but of the people of Northern Ireland that the Government are turning over a new leaf, will the right hon. Gentleman tell us that if, in the future, events such as Florida, the FARC, Castlereagh and the targeting about which we heard in March and April come to light, those incidents would fall within his definition of breaches of the ceasefire and would in future, though they did not in the past, trigger his use of the powers which, up till now, he has left unused?
	Secondly, if the right hon. Gentleman uses those powers—he is referring to introducing a motion in the Assembly to exclude from the Executive a party which is associated with a paramilitary organisation in breach of the agreement—what will he do if he does not get cross-community support in the Assembly? I asked him that question last Tuesday. He is depending on the Social Democratic and Labour party and Sinn Fein, for example, to exclude Sinn Fein. What will happen if they do not support him? Will he give up and say, "Well, I did what I could. There is nothing more I can do", and go back to the state of indecision and funk that we have had for far too long?
	Thirdly, will the Secretary of State now explicitly reject the revolting idea that there is some difference between violence perpetrated by paramilitary organisations on their own communities and violence directed at, for example, policemen, soldiers or politicians? Will he reject that? Will he state clearly that all violence is equally unacceptable, and all violent breaches of the ceasefire and the agreement will equally qualify to trigger the powers that he has belatedly promised to use?
	Fourthly, will the Secretary of State deal with another question left untouched by his statement? What will he do when breaches of the ceasefire or the agreement, or threats to peace in Northern Ireland, come not from organisations connected with parties in the Executive, so the idea of excluding the party concerned from the Executive would be an irrelevance? What will he do to gain greater leverage over such organisations?
	I revert to the point that I made in our debate last Tuesday: will the right hon. Gentleman urgently concert, as I asked him to do, with the Irish Government and the American Government to put in place real financial and other penalties for any organisation that he may specify as being in breach of the agreement and the ceasefire? At present, as he knows, the entire specification system is a paper tiger—a sword of clay, I called it the other day. That is not good enough. Will he do something about it? [Hon. Members: "This is not very positive."] I wish I could be more positive. I was hoping desperately for some real decision, for some real new move forward, for some new boost to the peace process. It is disappointing to us all that we have not had that.
	Finally, in a spirit of constructive co-operation, I put five proposals to the Secretary of State last Tuesday, and we got no response at all to any of them. The Secretary of State was not able to refute the good sense of any of those proposals, but he was not willing to take them on—perhaps because of the "not invented here" syndrome. If he will not accept my proposals, does he accept the Taoiseach's suggestion—which the Taoiseach referred to as a determination—that decommissioning should be completed by next May? Will the right hon. Gentleman state unequivocally that no party will be allowed to serve in the Executive after the legislative elections next May if it has not fulfilled its obligations under the agreement or if it is associated with a paramilitary or other organisation that is in breach of those obligations?
	The Opposition have always said—I repeat it now—that no peace process can succeed anywhere unless two fundamental principles are observed. First, there should be balance, fairness and even-handedness between the parties. There should be no perception that one side is getting all the benefits and the other is being taken for a ride. Secondly, there should be a proper and rational structure of incentives. Rewards should follow performance. If there are breaches, there should be penalties, which should be enforced. I believe firmly that we have been right all along to state that the peace process will make no progress except on the basis of those principles.
	I take comfort from the fact that there have been moments this afternoon when the Secretary of State sounded as though he accepted the good sense of that approach, at least in theory. More is required than to accept those principles in theory. They must be put into practice, which requires real toughness, sustained political will and a robustness that we have not seen from the Government over the past four years. That is why we are in this terrible position. I hope and I pray that at this eleventh hour and 59th minute the Government will show those qualities from here on.

John Reid: If that is the hon. Gentleman speaking in a spirit of constructive co-operation, I would not like to see him when he is trying to be bombastic and pompous. He used the word vacuous. I listened carefully to his proposals, and I am afraid that vacuous would be too substantial a word to describe them. I did not pretend that I could solve this problem, but he omitted to mention that I made a number of proposals. He may not accept some of them, but they included new security measures, more troops on the streets, additional bearing down on armed gangs, the investigation of new legislative powers, a political initiative at a local level, the mechanism for shining light on paramilitary activity in the community, and an attempt to clarify the items that would be considered in a judgment on ceasefires. He may regard those proposals as inadequate, but they hardly bear comparison with his own suggestions, which as far as I could make out were to discuss matters with the Irish.
	The hon. Gentleman's most offensive accusation concerned our promise and belief that the peace process would bring an end to deaths. It is true that there has not been an end to deaths. There have been six deaths this year, and that is six too many, but to act as though that is no different from 106 or 406 does not do justice to the people of Northern Ireland or to their achievements.
	The hon. Gentleman asked me about police numbers. I wish he would study the facts. I have increased police recruitment by 60 per cent. above the envisaged target. I would increase the numbers even further if we had the physical and training capacity to do so. He also asked about the full-time reserve. He should understand that part of the process is to pass decision making to people in Northern Ireland. The Policing Board is discussing with the police a complete human resources strategy.
	What the hon. Gentleman wants us to do with the Policing Board, however—which is to overrule it, and dictate—is exactly what he wants us to do with the membership of the Assembly itself. He does not seem to understand that the decision on exclusion lies with the Assembly, not with the Executive and not with the House of Commons. He suggested that we should simply ignore and overrule the Assembly.
	I am empowered by Parliament to require the Assembly to consider the relevant motion on the holding of ministerial office—a point that has been put to me continually by the leader of the Ulster Unionist party, the right hon. Member for Upper Bann (Mr. Trimble). Following a breach of the ceasefire by the IRA, I would be ready to use that power as a means of enabling the Assembly to address these matters. I wish that the contribution of the hon. Member for Grantham and Stamford (Mr. Davies) had been slightly more constructive and slightly more related to reality.
	Let me make two final points. First, I omitted to congratulate the hon. Gentleman on being reappointed to his position on the Front Bench, and to tell him that that probably brought me even more joy than it brought him. Secondly—this is a more serious point—I wish that he would remember that part of the reason why we have been successful in the peace process, in so far as we have been, is the bilateral way in which Members have supported it.
	People will recall the days when, in the midst of a terrorist campaign and murder and mayhem on the part of the IRA, the last Conservative Prime Minister, John Major, conducted secret talks with the IRA. He denied that in the House. It would have been easy for the Labour party to make mischief on a parti-pris basis, which the hon. Gentleman sometimes gives the impression of doing. We did not do that. The magnitude of the project on which we are embarked is such that all of us should do all we can to keep partisan political point-scoring quite separate from genuine criticism. Not for the first time, I think that the hon. Gentleman failed to do that.

Several hon. Members: rose—

Mr. Speaker: Order. Before I call another Member, let me ask for calm. I well understand the difficult situation and the emotions that we feel about Northern Ireland, but I ask for calm.

David Trimble: There was one sentence in the statement with which I particularly agreed. The Secretary of State said,
	"People want us to face up to these problems honestly."
	I think it would be a very good thing if there were frankness, openness, honesty and transparency in the Government's approach. In particular, although it is an uncomfortable fact for him, the Secretary of State must understand and appreciate that there is and will be no credibility—certainly in the Unionist community—in any judgment by any Secretary of State on whether there has or has not been a breach of the ceasefire. If such judgments are to be credible, we definitely need another mechanism. The Secretary of State has hinted that there may be one. A provision is essential to introduce an objective element, and to enable an audit of paramilitary activity to be conducted at regular intervals. I hope that the right hon. Gentleman will undertake to propose such a provision as a matter of urgency.
	The Secretary of State told the hon. Member for Grantham and Stamford (Mr. Davies) that in the event of a breach of the ceasefire by the IRA he would use his power to require the Assembly to consider a motion for the exclusion of Sinn Fein. I want the Secretary of State to reiterate that, and indeed to link it, as he should, with matters that he mentioned in his statement. He said that he would give particular weight to any substantiated information that a paramilitary organisation was training, targeting, or acquiring or developing arms or weapons. I ask him for a clear, unequivocal undertaking that if there is substantiated information about such activities, he will send the Assembly a motion of that kind to consider.
	How many police officers have had to be relocated under the special purchase of evacuated dwellings scheme because of a terrorist threat arising out of the Castlereagh incident? How many have been relocated in the past couple of months? Is the figure not now well over 100? Were they not relocated because there was substantiated information on targeting? I ask the Secretary of State to respond specifically to that.
	On police numbers, is it not for the Secretary of State to decide on the future of the full-time police reserve? Will he give an undertaking that, if he gets a request from the Chief Constable and from the Policing Board, to prolong the full-time police reserve, he will immediately and unequivocally respond positively to that request and continue the police reserve? I am fairly confident that he will get such a request.

John Reid: The right hon. Gentleman asks four questions. I will take them in reverse order.
	Precisely because I ultimately have the decision on the full-time reserve, I cannot say that I will always do everything that I am asked by the Policing Board. If the police and the Policing Board agree on a given course of action, I, as Secretary of State, would extremely rarely take exception to that action. That has applied in every instance that I can think of since the Policing Board was formed. I see no reason why there would be imminent exceptions to it. I hope that that gives the right hon. Gentleman some reassurance on the way in which I would view any recommendations from the Policing Board.
	The right hon. Gentleman asked about the number of police officers. He will forgive me if I cannot give him an exact number—I will write to him. I can say only that I think he is around the right mark. The last figures I heard were around 90, but they may have moved up to over 100. There is a range of reasons, but the right hon. Gentleman is absolutely correct: they are directly related not to substantiated evidence but to the main line of inquiry that has been followed into the break-in at Castlereagh and the—[Interruption.] I know that the hon. Member for South Antrim (David Burnside) is keen to speak. I am keen not to respond to all his sedentary comments. If he will encapsulate them in a question, I will respond to him.
	The issue is connected with the line that has been pursued by the police. The major line of inquiry remains that the break-in was committed by republicans.
	The right hon. Gentleman asked me two other questions, one on the ceasefires and the other on sanctions. On the ceasefires, I think that I have been as plain as I can today in outlining the circumstances under which these judgments are made. They have to be made in the round. By definition, they have to take account of information, sometimes information that has been upgraded to intelligence—there is a difference. Sometimes, for very obvious reasons, that information cannot be made public because it would put other lives at risk.
	Obviously, a number of unforeseen factors have to be taken into account, but I have made it plain today, lest any clarification were needed or anyone were under any illusions, that I will take into account subjects such as targeting, weapons acquisition, development and the others that I outlined.
	If there were evidence that a ceasefire had been broken, the right hon. Gentleman asked me whether I would be prepared to put a motion, as I am empowered to do by this House, before the Assembly. I have said that in those cases my general aim is to let the institutions flourish, to give them stability—that is my purpose; I am sure it is the right hon. Gentleman's too—but obviously the breach of an IRA ceasefire would constitute very grave circumstances indeed. Under the Belfast agreement it is for the Assembly to decide who sits in the Executive, but I am empowered by Parliament to require the Assembly to consider the relevant motion on the holding of ministerial office. In circumstances in which I decided that the IRA had broken the ceasefire, I would be ready to use that power, and to place such a motion before the Assembly to require it to address the matter.

Kevin McNamara: Many Labour Members will have welcomed the statements—made in measured terms—by my right hon. Friends the Prime Minister and the Secretary of State. In particular, we welcome the fact that not many new hoops have been created for pro-agreement parties to jump through to prove their bona fides. Will the Secretary of State explain what he means when he talks about "local political initiatives"? Are they coupled with his writing to the parties, and has he considered asking them individually—and collectively—to meet him to discuss how stalling can be prevented, and how they can co-operate to show the great advantages that have been achieved in Northern Ireland as a result of the agreement?

John Reid: Yes, the two things are separate. It is not the only action that we are taking, but I thought that, in view of the debate and discussion that has occurred, the simplest way to begin was to write to everyone, asking them to offer reassurances in unequivocal language about their commitment to the principles on which they entered into the agreement.
	My hon. Friend also mentioned trying to get local politicians, particularly at the interfaces, to establish a structured partnership or process, so that there are fewer surprises, earlier warnings and attempts to restrain both communities. That is a political local initiative, which I have asked the Under-Secretary of State for Northern Ireland, my hon. Friend the Member for Kilmarnock and Loudoun (Mr. Browne), to undertake. He began that process several days ago. It will be long and difficult because, whenever acts of violence are committed—whether here or in other difficult conflicts abroad—it is difficult to get people to speak to each other. However, it is worth undertaking that process. A level of good will exists on the ground among all the parties, and I hope that all parties that have committed to seeing the peace process work will be involved.

Lembit �pik: Will the Secretary of State accept the Liberal Democrats' continuing and, as I hope he will agree, consistent supportas a critical friend, but a supporter all the samefor the Good Friday agreement and the Government's sincere efforts to try to make the peace process work? Does it not strike him as curious that the Conservatives are taking such a hard line, given that their time in government proved unequivocally that they made significant progress only when they showed considerable flexibility in terms of their public comments and private actions?
	Does the Secretary of State agree that the recent outbreak of violence and the deterioration of the situation in Northern Ireland should concern us all? He said that six deaths were too many, but I am sure that he will agree that one is too many, and that to that extent we have urgent and pressing business to attend to. Although it is of course sensible to deploy police and Army resources in areas of greatest difficulty and stress, does he accept that doing so nevertheless puts particular strain on those forces, particularly the police, who feel overstretched in other areas? Is he willing to listen to further representationsI know that he has already received someabout the police's resourcing requirements, in order to maintain overall and normal, as we might call it, policing of Northern Ireland in these difficult times?
	Does the Secretary of State accept that, although there is always a strong case for increasing police powers, bail arrangements and so on, simply increasing the reach of the law will not in itself directly address the problem? In effect, it deals with the symptoms but not the underlying cause. Will he consider the fact that dialogue in the local communities of which he spoke is much more likely to address attitudinal difficulties? In the eyes of many who are motivated by those views, and the individuals who promote violence, the answer lies much more in the local communities, which are not being listened to, than in simply increasing the reach of the law.
	On racketeering, will the Secretary of State consider increasing resources to prevent organised crimefor example, the ongoing haemorrhaging that is affecting the legal fuel industry in Northern Ireland as a result of illegal racketeering from the south, which unquestionably does, in large part, fund the paramilitary activities that he has been describing? Will he acknowledge, as I have, that the IRA statementthe so-called apologylimited though it was, was nevertheless an important statement? Does he agree that there are grounds for reciprocity in de-escalating a situation that has remained tense with little variation since the signing of the Good Friday agreement?
	In that context, does the Secretary of State agree that trust and responsibility are extremely important, not only in this House but among the parties in Northern Ireland and that hon. Members have a responsibility not to destabilise the situation by trying to score cheap or opportunistic party political points? [Interruption.] If no party is guilty of that, why did Conservative Members start shouting when I made that point?
	Finally, the Secretary of State said that he had written to the political parties in Northern Ireland to secure their commitment to the principles that he outlined. Would it be possible for him to share a copy of the generic letter that he sent to them? Fundamentally, does he agree that the letter and the response will have real teeth only if people and organisations in Northern Ireland are clear that they are not able to push this matter indefinitely and beyond unspecified parameters? In that context

Mr. Speaker: Order. The hon. Gentleman is trying the patience of the House. I must be fair. There is another statement and only a few Members have participated in questions on this one. I ask the Liberal Democrat spokesman to leave it at that and to let the Secretary of State reply.

John Reid: I shall do so as quickly as possible, Mr. Speaker.
	It is true that all of us have a responsibility in this matter. I pay credit to the hon. Member for Montgomeryshire (Lembit pik) for the contribution that he has made not only publicly but privately, behind the scenes, in a helpful manner. As far as the police are concerned, we are always open to representations and my hon. Friend the Minister with responsibility for security will no doubt be able to discuss that subject with him. On racketeering, he will know that the organised crime taskforce has scored some significant successes under the chairmanship of my hon. Friend the Minister. We have tried to supplement our efforts by bringing in Professor Goldstock. We have the police, the organised crime taskforce and Ron Goldstock, but if the hon. Gentleman has any ideas I am sure that my hon. Friend the Minister would be happy to receive them.
	The hon. Gentleman is right to say that despite all the measures that we could introduce, security on its own will not solve the problem, nor will everybody in this House solve it. It has to be addressed by the parties in Northern Ireland, at a leadership and community level. If people such as me could solve the problem by going across that stretch of water and telling people what to do, it would have been solved a long time ago. I know my limitations, but I am committed to do what I can, as are the Government.
	Finallywith your indulgence, Mr. Speakeron paramilitary attacks, it is important, as the hon. Gentleman said, to recognise the level of violence on both sides of the community. Since the signing of the Good Friday agreement, there have been about 1,100 attacks of one nature or another, more than 700 of which have been committed by loyalists. It is essential to say that it is loyalist and republican paramilitaries who are involved and, very often, dissident republicans as well. It is wrong to give the impression that this is only a problem of the IRA. It is not. It is also wrong, however, to forget that the republican movement is in government in Northern Ireland. It therefore has an even greater responsibility than others to tackle this within its own movement, for its sake as well as for the benefit of the community in Northern Ireland.

Eddie McGrady: I wish to join in the Secretary of State's message of sympathy for the bereaved family from north Belfast. I also welcome the right hon. Gentleman's statement today and the limited measures that he is capable of introducing to address the problem in Northern Ireland.
	I endorse the answer that the Secretary of State has just giventhat, primarily, the resolution of conflict in Northern Ireland is up to the Northern Ireland parties. That resolution will not be furthered or helped in any way by the fall of the democratic institutions in Northern Ireland. Does the Secretary of State agree that a threat to bring down the institutions that we have so carefully nurtured in Northern Ireland, on the basis that to do so would in some way assist security and the abolition of violence, is inexplicable? I endorse the increased forces being sent to the interface, because the people need some assurance that the terror that they suffer every evening will be ended. They need to see that the perpetrators are being pursued, and that it will result in prosecutions by the security forces.
	The people of Northern Ireland are looking to the House today for a message of hope. The abandonment of the bipartisan approach and the debate that we have had today will do nothing to address the problems that we have. Will the Secretary of State ensure that our people can more easily believe that the Government treat loyalist and other paramilitary activity for what it really is? He said in his statement that he wanted action to be increasingly vigorous and more transparent. If that happens, it will provide an additional measure of confidence. I hope that today's deadline of 24 July and dissatisfactionfor good or bad reasonswith the Secretary of State's answer will not herald the collapse of the institutions that we have carefully built up in Belfast.

John Reid: On the last point, I hope that it will not, because my purpose in saying what I have said todaywith all the limitations that any Secretary of State must havewas not to undermine the institutions. My purpose was to buttress democracy. Herein lies a paradox that frequently confronts everyone who is involved in politics in Northern Ireland. Demands are made for more information, greater scrutiny, transparency and honesty and for the placing in the public domain of more information on levels of violence and paramilitary involvement. Although all violence is intolerable, it is at the same time feared that people will think that any incidence of violence should have the same consequence. It is difficult for people to address the issue, because they fear that the consequence for any act of violence would undermine the very institutions that were meant to replace the violence.
	Several hon. Members have raised the issue of greater transparency, including the right hon. Member for Upper Bann (Mr. Trimble), the leader of the Ulster Unionist party, and I read in the papers that that is considered a sop to Ulster Unionism. In fact, the same matter has been raised by the leader of the SDLP and the leader of the Alliance party. Therefore, I was saying today not that I would substitute my judgmentwhich, ultimately, only I can makebut that I would try to find ways to place further information in the public domain that will allow the public in Northern Ireland to know exactly what is going on, in so far as we can do that.
	I regret the drift away from bipartisan support for the agreement. One week we are told that the Opposition are supporting us in a bipartisan spirit, and the next week we are told that they are not. Another time we are told that they support the peace process as a whole, but that they object to all the bits of it.

Nigel Dodds: This morning, I stood in the home of my constituents, Mr. and Mrs. Lawlor, whose son Gerard was murdered in the early hours of Monday morning. Yesterday, I had the sad job of standing in the home of Mrs. Morgan, the widow of William Morgan, who was done to death by sectarian killers in the Tigers Bay area of my constituency.
	I welcome the Secretary of State's comments, and the Prime Minister's earlier, joining us in sending condolences and sympathies to those families. It is only by the grace of God that some of the other victims of shootings in north Belfast were not murdered.
	Does the Secretary of State agree that people look to Government in north Belfast and throughout Northern Ireland for leadership on what will happen to paramilitary organisations, and that they look not only for words but for tough and effective action? They will look today at this statement and hear these words, and there will be grave disappointment, even despair, throughout Northern Ireland, at the lack of any effective action to deal with the corruption of government in Northern Ireland, whereby a signal is being sent that it is all right to be democrats by day but to murder and be on the streets causing disturbance by night.
	Does the Secretary of State further agree that it is incongruous to have a Governmentan organisation, Sinn Fein-IRAwho refuse to support the police? I welcome the extra resources for the police and the Army, but that organisation refuses to support the police, refuses to recommend that information be given to the police, and refuses to condemn attacks on the policethe other day, its national chairman refused to condemn a murderous attack on a recruit to the Police Service of Northern Ireland. Does the Secretary of State accept that all those reasons render Sinn Fein-IRA unfit for government in Northern Ireland?

John Reid: I agree with the hon. Gentleman's opening comments, and the whole House shared the condolences and sympathies for Gerard Lawlor, and for the others who have been injured or murdered or who have suffered family pain.
	On the question of leadership, yes, it does take leadership. Leadership is not always saying no. Leadership is not always shouting at the highest decibels. Indeed, in my experience, the effect and influence that one has is often in inverse proportion to the decibel level of the rhetoric that one uses.
	I would venture to suggest to the hon. Gentleman that, since Gladstone, no one has given more time and leadership on this issue than my right hon. Friend the Prime Minister. I truly think that when the books are written, however much we may succeed or not, they will say that he gave a gigantic measure of leadership.
	The hon. Member for Belfast, North (Mr. Dodds) is a leader himself. He is a Minister; he is a Member of the Assembly as well as a Member of Parliament. I cannot remember whether he is a councillor, but he certainly has at least a duopoly, if not a triopoly, of capacity to lead. One of the great things about leading is that one must reach out beyond one's own base in order to lead, and it is unfortunate that the hon. Gentleman, by the way he puts his arguments, sometimes gives the impression that he would want Sinn Fein excluded from government, not as a consequence of anything but as an objective of his own politics. I believe that when that is posited in that fashion, it is an abrogation of leadership in the context of Northern Ireland.

David Winnick: Is my right hon. Friend aware that, despite all the setbacks, it is very disappointing indeed that the negative critics refuse to recognise the amount of progress that undoubtedly has been made in the past four years, and the number of people alive in Northern Ireland who would not be if no agreement had been signed in 1998? Does he agree that it is unfortunate that the negative critics always harp on the negative, not the positive?
	Does my right hon. Friend accept that there is an obligation on all the parties in Northern Ireland, including Sinn Fein, to denounce violence from whatever source it comes and to do so on every occasion, and to do so in practice?

John Reid: I certainly hope that they will do so, and I agree with my hon. Friend. We can all complain that the rose bush has a thorn, but sometimes we should just rejoice that the thorn bush has a rose. On Northern Ireland, we have to appreciate just how far we have come, as my hon. Friend pointed out.
	However, that is not the real test. As I said earlier, the real test is not, Are we better? because, for all the rhetoric that we sometimes hear, everyone in their senses knows that we are in a better position than we were once in. The real test is, Are we in the position that the people in Northern Ireland have the right to expect us to be in? They should have a right to expect, if we have not arrived at the destination, that we will at least still be travelling, and be seen to be travelling, towards the destination that gives them the same comfort, security, rights, equality and way of life as those that the rest of the people of the United Kingdom have.

Andrew Hunter: Will the Secretary of State reflect that his statement was a woefully inadequate response to a desperate situation, not least because all the measures that he announced should have been common practice all along? Will he further reflect that the Government's failure to act decisively against paramilitaries and their political representatives can only increase the despair and disillusionment of law-abiding citizens in Northern Ireland?

John Reid: Well, I will certainly reflect on what the hon. Gentleman asks me to reflect on. If he asks me for my instant reflection, I would say that, however bad the situation is just now, if it is a commentary on the inadequacy of the Government, then when we were 10 times worse in terms of killings and injuries, it must have been a fairly critical commentary on the Government whom the hon. Gentleman supported for almost 20 years.

Harry Barnes: Is not the honesty that we need about the situation in Northern Ireland the recognition that there are clear sides to the coin? On the one hand there are all the achievements that have been put in place since the Belfast agreement, and on the other, there is the continuing paramilitary activity, which is degenerating even further into Mafia-type activity. Perhaps all of us should try to ensure that we do not use a one-sided die of examples to push one matter or the other. Is not one way in which we can advance the principles involved in the Belfast agreement and ensure that peace is finally established in Northern Ireland action to cut off paramilitary funding? The House will consider the Proceeds of Crime Bill later today, and there is the work of the organised taskforce. That type of work shows that we are being tough on terrorism and taking action that should satisfy or bring on board those who are disgruntled with the developments that have taken place.

John Reid: I agree with every word my hon. Friend said, and I do not need to add anything at all to it.

Jeffrey M Donaldson: This statement may offer security measures, and I welcome that, but in political terms it offers absolutely nothing new. There is no proposal in this statement to deal with the political crisis in Northern Irelandand it is a crisis.
	The Secretary of State says that there is no acceptable level of violence, yet he ignores Colombia, he ignores Castlereagh and he ignores the violence on the streets of Northern Ireland when he decides that the IRA ceasefire is still intact, so clearly there is some acceptable level of violence if the IRA ceasefire is deemed still be to be intact. So what confidence can we have that the Secretary of State will make a ruling in the future that the violence that has occurred, or that may occur in the future, represents a breach of any of the ceasefires? I must say personally that I do not have the confidence that the Government will act.
	The Secretary of State says that he has written to all the political parties asking them to reaffirm the Mitchell principles. Can I ask the Secretary of State what the Ulster Unionist party, the Democratic Unionist party, the Social Democratic and Labour party or the Alliance party have done that requires us to reaffirm the Mitchell principles? Why is he putting those parties on a par with the paramilitary-related parties? That is an insult to the integrity of the democratic parties in Northern Ireland, which have forsworn violence and opposed violence at every turn. Why does he need us to affirm or reaffirm the Mitchell principles?

John Reid: On the second point, no one is questioning the integrity of the hon. Gentleman or his party, but he will know that, throughout this process, we have used a combination of individual and collective approaches to problem solving, to overcoming challenges and to putting forward new proposals. On this occasion, it seemed sensible to do things collectively. I have no doubt that a reaffirmation for everyone committed to the principles would be a useful starting point.
	As regards the hon. Gentleman's other comments, I will be quite honest with him. I owe that to him, as he owes it to me. Nothing I said today short of putting Sinn Fein out of government would have satisfied him. He has made that absolutely plain, as have several of his colleagues. His solution to moving the republican movement away from violence and into politics is to exclude them from politics. That is not to me intuitively a position that should be pursued at all times, given all the consequences that it has. I respect the hon. Gentleman's positionwe have a disagreement over it but I do not question his integrity in reaching that judgment and I hope that he does not attack my integrity in reaching mine.

Kate Hoey: Does the Secretary of State not think that there should be some form of independent mechanism that would examine breaches in the ceasefire? Given the increasing violence in parts of Northern Ireland, does he not think that he should be sending out a message today that the full-time reserve will be maintained, and that that would be a very big confidence boost?

John Reid: On the first question, my answer is no. I have the duty and the obligation to make the decision on the ceasefire. It will be my decisionI will maintain, not abrogate, that duty. As regards whether we can find a mechanism for putting into the public domain further information on these matters, that is another question on which I said I would consult. On the question of the FTR, the Police Service of Northern Ireland is already in consultation with the Policing Board. I have no intention of overruling the Policing Board, pre-empting it or taking away those rightswe have waited almost 80 years to get a cross-community board of elected representatives, and I will not pre-empt their decisions.

Patrick Cormack: Will the right hon. Gentleman pause for a moment and considerif he wishes to buttress democracy and to increase confidence in the peace process, in which I wish him wellappointing at least an advisory committee on the ceasefire, consisting of Privy Councillors and perhaps chaired by somebody like Lord Bingham, the former Lord Chief Justice, who would bring an objectivity and a credibility to this whole process?

John Reid: Having paused and reflected on the matter, were I to have such a committee, the hon. Gentleman would be a marvellous chairman. I am afraid, however, that I will not abrogate that decision. I will make the decisions, either de jure or de facto, as the law prescribes, as empowered by Parliament, and as obliged as Secretary of State for Northern Ireland.

David Hamilton: I congratulate the Secretary of State on the measured way in which he has approached the subject. I also congratulate him on the amount of work that has been done. I find it disappointing that the Opposition take an opportunist attitude in relation to what has happened. As someone who has been to Northern Ireland on several occasionsthe last occasion was just over a month agoI have met many of the victims, including Omagh victims. I would suggest two or three small measures that may be of help.
	The Prime Minister gave a pledge that he would meet the victims of Omagh after the bombing there. During the recess, during these difficult times, that promise could be kept. That may be a way forward. The people of Northern Ireland feel isolatedon the one side, there is a community who want a united Ireland, and on the other, a community who feel betrayed, for whatever reason, and who feel that the Government have let them down. I do not believe that that is the case, but during the recess, my right hon. Friend the Secretary of State and the Northern Ireland team, who have done a tremendous job, should pool all their resources to make sure that the people of Northern Ireland know that as long as they wish to remain British, they will continue to remain so.
	If things deteriorate during the recessI have a sense that things are very difficult at presentthe House should be recalled. That is an important move that would identify

Madam Deputy Speaker: Order. I call Dr. Reid.

John Reid: I thank my hon. Friend. I agree with many of his points. He makes a point of which it is worth reminding everyone. Northern Ireland is not only part of the United Kingdom but a greatly valued part[Interruption.] Sorry about the distraction, Madam Deputy Speaker. I repeat that Northern Ireland is not only a part but a greatly valued part of the United Kingdom. That is one reason why I want all the representatives from Northern Ireland taking part in the debate here, which is where it should be held.
	I also want all the representatives here to consider whether they should go to Northern Ireland to discuss matters with people locally. I know that my hon. Friend has done that, as have many Labour Members. My hon. Friend the Member for Hamilton, South (Mr. Tynan) has been across, and I hope that Conservative Members will also continue to make visits. Not only is that good for the House's knowledge of events in Northern Ireland, it is good for the people of Northern Ireland to see that representatives in the House exercise a continuing close interest in their affairs.

Andrew MacKay: May I gently put it to the Secretary of State that, in the light of the level of paramilitary violence in both communities in north and east Belfast and following the robust comments again from the Prime Minister a few minutes ago, it is inevitable that there will be great disappointment that no concrete proposals have been made this afternoon? We should particularly bear in mind the fact that the very limited apology that we had from the Provisional IRA last week took us only a tiny way forward with its weasel words about non-combatants. Does the Secretary of State agree that it should have said that the war was over? Then we would be making real progress.

John Reid: Of course I would like the IRA to say that the war is over. I suspect, however, that the British Secretary of State demanding that would make it rather less likely to happen than the other way about. None the less, we would welcome such a statement. I welcomed last week's statement because of the strength of the apology and, if it was not an apology, it was at least an acknowledgement of the suffering of what it called the non-combatants. It is a step in the right direction.
	Many little steps are being taken in Northern Ireland, including by the republican movement and by the loyalists. I am disappointed that, after the no-first-strike statement and my visit to speak to a Loyalist Commission audience, the events of the weekend should have happened. They were dreadful, and I am sure that everyone else regrets them.
	If that process continues, it will bring lots of disappointments to lots of people, and I will perhaps be one of those who has my fair share of them. Finally, I thank the right hon. Gentleman for approaching me gently for the first time in his parliamentary career.

Kevin Brennan: Was my right hon. Friend as sickened as I was by the comments attributed to the so-called Ulster Freedom Fighters that the murder of Mr. Lawlor at the weekend represented a measured military response? Was it not, in reality, a brutal and blatant attempt to wreck the peace process and the Belfast agreement? Is it not the responsibility of every democratic politician to work in a quiet, statesmanlike and calm way to ensure that such groups do not succeed?

John Reid: I agree entirely. It was, to use the words of an Ulster Unionist Member, an act of pure naked sectarianism. It was an appalling act, and several appalling acts were committed over the weekend by the loyalist organisation that my hon. Friend mentioned or, in the case of another shooting, possibly by the Irish National Liberation Army. All were dreadful acts and they were motivated by the cancer of naked sectarianism that so often afflicts Northern Ireland society.

Martin Smyth: The Secretary of State will be aware of the promise in 1998 that was given in my constituency, and I know just how folk have reacted to the failure to live up to it. The right hon. Gentleman paid tribute to the Prime Minister by comparing him to Gladstone, but to whom would that give comfort in Northern Ireland?
	May I press the Secretary of State specifically on the statement which talks about preparation for a terrorist campaign in Northern Ireland or elsewhere? In a recent answer that I received from the Prime Minister, I was told that home-bred terrorism is not looked upon as international terrorism. International terrorism is just al-Qaeda. Does elsewhere refer only to the United Kingdom or to those who are engaged in sharing as they prepare for campaigns in other places?

John Reid: Firstthe hon. Gentleman may have misheard meI did not compare the Prime Minister to Gladstone. Even I would not be as sycophantic as that. I said that my right hon. Friend had shown more leadership on this issue than any Prime Minister since Gladstone. I can see how the hon. Gentleman's mind is working: Gladstonehome rule; Blair. I must clarify the point that I did not compare them.
	On terrorism at home or abroad, I have been as clear as I can. What has been suggested, not least by the hon. Gentleman's colleagues, is that the Government have been encouraging a belief in certain quarters that certain types of activity would be acceptable. The reason why we made today's statementwhich I hope gives him a little more confidenceis that my publicly declaring my position means that anyone who required clarification or had suffered from any illusions in the past need do so no longer.

Iain Luke: The Secretary of State referred to Back Benchers who have recently had the chance to visit Northern Ireland, of whom I am one. I visited Stormont to speak to members of all the parties and visited the police. I also visited both sides of the divide in east Belfast to speak to community activists and representatives. Having been involved in community activity in my constituency in Scotland, I was very much taken by the need and ability of those people enthusiastically to discuss the prospects for peace in both their communities.
	Does the Secretary of State agree that there is a wider role for Back Benchers of all parties in visiting Northern Ireland, taking the message of peace, acting as a catalyst for discussions and encouraging people from the parties that are represented by Members here at Westminsterirrespective of whether they take their seatsto act as a joint body to discuss the prospects for bringing the two communities together by building bridges instead of sheltering behind the peace barriers, which actually separate them?

John Reid: My hon. Friend illustrates how much he has benefited from not only taking an interest in, but visiting, Northern Ireland. It is beneficial to the House when hon. Members can bring to it the experience that they have gained from doing so. It is also reassuring to people in Northern Ireland that, having achieved the principle of consent in deciding their constitutional status, and being a valued part of the United Kingdom, hon. Members take the time and trouble to visit Northern Ireland as they would other parts of the United Kingdom.

Accounting and Auditing Issues

Patricia Hewitt: With permission, Madam Deputy Speaker, I should like to make a statement about the interim report of the co-ordinating group on audit and accounting issues, which my right hon. Friend the Chancellor and I are publishing today.
	The world's capital markets rely on timely, true and fair financial reporting, underpinned by high standards of auditing and accounting. We have all been shocked by the major corporate failures in the United States at Enron and WorldCom. It is incumbent on the Government to be vigilant and to take the necessary action where required.
	Audit and accountancy standards in Britain are different from those in the United States: different and, as is now widely acknowledged, in some respects better. That is partly the result of changes made here following the UK's own corporate scandals of the late 1980s. However, there is no room for complacency. The millions of people who invest in our companies, whether as individuals or through their pension funds, look to the Government to ensure that our own financial reporting regime is as transparent and effective as possible.
	That is why the Chancellor and I set up a co-ordinating group on audit and accounting issues in February, chaired by the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Welwyn Hatfield (Miss Johnson), who has responsibility for competition, consumers and markets, and by my hon. Friend the Financial Secretary, and comprising the principal regulators. The interim report shows clearly what needs to be done to build on the strengths of the current system. The Government welcome the group's proposals.
	We are extremely grateful to the group for its hard work in producing the interim report, copies of which have been placed in the Libraries of both Houses.
	In responding to the interim report, let me stress that this is not about piling unnecessary regulation on the vast majority of companies that are honestly and properly run. But the actions of a few are damaging the reputation of all, and by taking sensible steps to strengthen corporate governance and financial reporting, and thus to restore investor confidence, we will benefit business and our economy as a whole.
	I turn now to the proposals contained in the interim report and the Government's response. A key recommendation is for tougher mechanisms to reinforce auditor independence.
	First, the group proposes, and we agree, that we must strengthen and enhance the role of audit committees. The audit committee should act more clearly on behalf of the shareholders. It should make recommendations to the shareholders on the appointment of the auditors, and underpin auditor independence; for example, by approving the purchase of non-audit services from the auditor. We welcome the work that the Financial Reporting Council will oversee to develop improved guidance in the combined code.
	We need to ensure that audit committees are effective and can act independently of the executive directors. Audit committees should therefore be made up entirely of independent non-executive directors. Derek Higgs's review of non-executive directors is obviously crucial in that respect. We need also to develop the competence of audit committee members; for example, by developing available training.
	Secondly, we agree with the report's conclusion that the principle of audit partner rotation should be extended to other senior members of the audit team and that the time scale for rotation of the audit partner should be cut from seven to five years. On the rotation of audit firms, the Treasury Committee, whose report was published yesterday, argues that there is a strong case for the mandatory rotation of audit firms, as well as audit partners and teams. We, and the group, will want to consider its report very carefully. The Chancellor and I are therefore asking the group over the next few months to look more closely at audit firm rotation, including the possible implications for competition in audit services, and to report by around the end of the year.
	Thirdly, the group says that we need to look in more detail at the need for a further tightening of the rules governing the extent to which auditors can provide non-audit services to audit clients. We agree, and I have asked for recommendations on that important point in the group's final report. I have also asked my Department to consult on changes to regulations under the Companies Acts to improve the disclosure by companies of the nature and value of non-audit work provided by their auditors.
	The group also wants to see much greater openness and transparency by the major accountancy firms in relation to their own processes, practices and structures. We agree with that too. One approach under serious consideration is to make such transparency compulsory for those audit firms undertaking the statutory audit of major companies. We will consider that with the recognised audit supervisory bodies by the end of the year.
	We also agree with the group that there should be an early review of the way in which the accountancy industry as a whole is regulated, including the role of the recently established Accountancy Foundation and its related bodies. Despite the efforts of Lord Borrie and his colleagues in the Accountancy Foundation, the new arrangements have not progressed as rapidly as we had hoped. The Chancellor and I have therefore decided to conduct an immediate review of the regulatory arrangements to see whether there are sensible structural improvements that should be made. That will include the question of future funding arrangements for the foundation and take into account the work to be undertaken by the review board on the arrangements for monitoring the work of auditors.
	The group also highlights the importance of proper international accounting standards. Given the increasing globalisation of capital markets, it is essential that our own Accounting Standards Board works closely with the international board to improve the transparency of company reporting. It is particularly important that such standards are developed to address share options and other share-based payments systems, which have played a significant role in the current concerns. That issue can be dealt with only at an international level, so I welcome the fact that the international board is giving priority to developing such standards.
	Of course, standards, whether national or international, must also be effectively enforced. I agree with the group that the financial reporting review panel should develop a proactive role as well as simply responding to complaints. I know that the panel is already looking at such a change, and we fully support moves to develop current practice. The group suggests that the Government should consider the adequacy of the current enforcement arrangements more widely, and we will do that as a matter of urgency.
	Finally, the group recommended, and we accept, that the Department of Trade and Industry and Treasury consider with the Office of Trading whether there are any competition implications arising from the high concentration in the market of audit and accountancy services for the largest firms, and whether any of the other proposals in the report have competition implications.
	I also remind the House of the important provisions contained in the Government's White Paper on company law reform, which my hon. Friend the Under-Secretary published last week. In particular, we have decided to introduce a statutory statement of directors' general duties; to require large companies to provide an operating and financial review, covering non-financial areas also, such as strategy and risk; and to place a legal obligation on directors to volunteer relevant information to the auditors and to give auditors the statutory right to ask for company information from employees and certain contractors.
	In preparing its interim report, the group was mindful of the fact that high standards of financial reporting and audit regulation are promoted in the United Kingdom in a number of ways, ranging from statutory or independent regulation to self-regulation, voluntary codes of best practice and market pressure. The effectiveness of the UK's arrangements must be judged by considering the combined effect of those various elements. The group's recommendations, too, must be seen in the same light, as a package of measures.
	This is only an interim report. The Chancellor and I have asked the group to carry on its work and to deliver a final report around the end of the year on progress made in all those areas. For our part, the Government will act quickly in response to the recommendations that fall to us to take forward. But success will require action from everyonefrom the regulators and the profession. I also challenge UK companies to make a difference, and welcome the fact that many are already doing so.
	As the co-ordinating group and, indeed, the Treasury Committee have both said, the status quo is not an option. The measures that I have announced today will ensure that the UK has the best possible regulatory regime that will benefit our companies, our capital markets and our economy alike.

Tim Yeo: I welcome this early opportunity to address some of the issues that have recently caused great concern on both sides of the Atlantic. I am glad that the Secretary of State decided to announce the publication of the interim report by way of an oral statement to the House, a practice that I hope she will continue to follow wherever possible. I am also grateful for a copy of the statement, which I received about an hour ago, and for the chance to glance at the report. I have obviously not had time to read the report from cover to cover but, from what the Secretary of State said, I am sure that there is much on which we will agree. I welcome the broad tenor of those aspects of the report to which she referred.
	For the sake of clarity, will the Secretary of State confirm that what she said today refers only to listed companies? I hope that before long she will be able to say whether the Government accept the need to raise the turnover threshold above which unlisted companies are required to undertake an audit to a more realistic level.
	Events in the United States have inevitably caused anxiety in Britain among employees, shareholders, creditors, customers and the general public. I agree that our accounting and auditing practices are sufficiently different from those followed in the United States to give us confidence that the problems that have arisen there are less likely to occur here. The vast majority of British businesses are honestly run and the vast majority of audits are responsibly conducted. We should not proceed on the assumption that the actions that occurred at Enron, which are the subject of criminal investigations in the United States, are widely practised in Britain.
	It is right, however, to review matters from time to time. We should never be complacent about the risk of uncovering a damaging financial scandal in this country. The restoration and maintenance of full trust in accountancy, reporting standards and audit procedures is important to ensure that business continues to have access to the funds that are needed to sustain growth.
	The overriding need is for the response to the current anxieties to be proportionate to the risks involved. It is important to distinguish between the more onerous requirements rightly imposed on listed companies and other categories of companies which, although subject to audit, do not need to meet similar demanding standards.
	On the specific issue of audit firm rotation, we should proceed with caution in considering the Treasury Committee recommendations.
	I have reservations about the idea that firms should be compulsorily rotated after a relatively short period. The costs would be substantial and would fall on the businesses concerned, and therefore on their shareholders and customers. Furthermore, an audit firm taking on an audit for the first time is not necessarily better able to scrutinise the operations of its client. However, rotation of audit partners and senior staff is a very different matter, and, subject to proper recognition of the special or different circumstances of smaller accountancy firms, I welcome the report's recommendations.
	I agree with the concerns that have been expressed about separating audit work from consultancy. It is important that there should be a clear statement, breaking down into individual categories of work the fees that are received for non-audit work, which are paid to firms that act as auditors. I hope that the Secretary of State will give her support to that.
	With reference to the Secretary of State's decision to conduct a review of how the accountancy industry is regulated, will she indicate its likely terms of reference and the timetable that she envisages for its completion?
	On the development of international accounting standards, does the Secretary of State accept that however desirable that may sound, Britain should not abandon our principles-based approach in favour of a rules-based system merely in pursuit of harmonisation? I would welcome a review of the accounting treatment of share options, however, and I hope that that would reflect the fact that share options are effectively a form of employee remuneration.
	Giving audit committees more responsibility seems sensible, although perhaps the Secretary of State could enlarge her comments about training for non-executive directors.
	Where the employees of an audit firm wish to join their client's payroll, proportionality should again be the watchword. It is clearly right that partners in charge of the audit should be subject to a cooling-off period before being able to move across to the former client. Restrictions on more junior staff who have worked for an auditor would not be justified.
	On the question of whether there is sufficient competition between accountancy firms, I am sceptical about the value of an OFT inquiry. It would be expensive, time consuming and possibly unproductive. Will the Secretary of State say whether her Department has received any complaints from businesses about the alleged inadequacy of competition between accountancy firms?
	The Secretary of State rightly distinguished between the United States' approach, which is rules-basedas long as all the boxes have been ticked the requirements appear to be satisfiedand the British approach, which requires the auditors to present a true and fair view. Does she agree that the Chancellor of the Exchequer has adopted the United States' rules-based approach in his concealment of substantial public liabilities arising from PFI and PPP schemes? That dishonesty and off-balance-sheet accounting sits ill with the Chancellor's consistently repeated claims that large sums of public debt have been repaid. Surely the British people as shareholders in all public projects, however financed, deserve to be treated in at least as open a manner as shareholders of the companies about which the Secretary of State has spoken.
	More generally, the loss of trust in the audit process, whether in the public or the private sector, weakened confidence when financial markets were already vulnerable. The effects of that weakening of confidence range widely, extending to pensions, jobs, endowment mortgages and many other matters. Nevertheless, despite those risks, our response should always be in proportion to the dangers involved. The essence of what is now needed is not necessarily more regulation but better regulation.

Patricia Hewitt: May I begin by welcoming the hon. Gentleman to his new portfolio on the Conservative Front Bench? I am grateful for his general support for the statement.
	On the issue of large versus small companies, some of the proposals that we are making apply only to large companiesfor instance, the proposal for an operating and financial review, which will really apply only to the 1,000 largest companies. Of course, the greatest impact of the proposals that I have announced this afternoon will, rightly, be felt by the listed companies. I remind the House that a few years ago we raised the threshold for statutory audit to exempt a large number of small firms from that onerous requirement.
	I strongly agree with the hon. Gentleman that we do better to have a principles-based approach to accountancy standards than the detailed check list of rules that has been adopted in the United States. I think that the United States is likely to move more in our direction in that respect, but I agree that we should not sacrifice our own approach even if doing so would achieve greater international harmonisation.
	The hon. Gentleman is right to say that there are arguments for and against rotation of audit firms. I observe that the Australian and the Irish Governments, who recently reviewed that issue, both came down against proposals for mandatory rotation of audit firms, but, as I said, we will consider that in more detail before arriving at a final view.
	I hope that I made it clear in my statement that I entirely agree with the hon. Gentleman about the need for much greater transparency about the purchasing of non-audit services from the audit firm. We will consider that matter further, but I think that the proposal that we have already acceptedthat audit committees should approve the purchase of non-audit services from their auditorswill be helpful.
	When reviewing the regulatory framework we shall look at the entire structure. I shall in due course publish more detailed terms of reference, but we want to conduct that review as quickly as possible, building on the work that is already being done by the various bodies. I hope to be able to report on that piece of work around the end of the year.
	Of course, share options should properly be regarded as part of the pay package of employees and directors of a firm, but it would be wrong of our country to act in isolation in that respect. That is why I welcome the fact that Sir David Tweedie and his colleagues at the international board have said that they will deal with the issue and propose appropriate standards.
	The hon. Gentleman raised the specific question of skills and training for non-executive directors. As part of his wider review, Derek Higgs is to consider the skills required for non-executive directors and how we can widen the pool of appropriately qualified people. However, it is disturbing that there appears to be no properly agreed definition of the competences that are required of members of audit committees in particular. That is certainly a matter to which the regulatory and professional bodies should pay attention.
	On the issue of competition, the Office of Fair Trading will, naturally, want to consider both the report published today and the Select Committee's report published yesterday. As far as I am aware, no complaints about lack of competition in the market for audit services have been made to my Department.
	On the hon. Gentleman's final point about broader Government issues relating to accounting practices and public finances, let me make it clear that since he became Chancellor of the Exchequer, my right hon. Friend has ensured that, for the first time, the assumptions that underpin each year's Budget are independently audited by the National Audit Office. Public-private partnerships are properly accounted for in line with international best practice. When it comes to transparency and robustness of the fiscal framework, we are among the best in the world, and I am sorry that the hon. Gentlemanin an otherwise welcome responsedid not acknowledge that.

Vincent Cable: I welcome the statement, as far as it goeswhich is not all that farin making proposals on the tightening up of audit and accounting practice, especially the tentative moves towards rotation of auditors and separation of audit and consultancy practice. However, does the Secretary of State agree that if changes such as rotation are to be meaningful, there must be far more competition? It is impossible to envisage real competition in an industry dominated by only four companies. I welcome the move to the Office of Fair Trading reference, but does the right hon. Lady agree that the only logical outcome that would increase competition is the break-up of one or more of the large accounting companies? Is that an outcome that she would welcome?
	I welcome also the move to strengthen the independence of audit committees in companies. Does the right hon. Lady agree that for that to become effective, there must be much more far-reaching reform of independent directorships following the Higgs review? Does she agree also that at present the largely self- selecting group of non-executive directors means that a few individuals hold far too many directorships and are unable to provide the focus and professional supervision that companies need?
	The right hon. Lady has not referred to fraud. Is she consulting the Law Officers on how to introduce a tougher approach to real financial fraud? Are there not still too many cases, such as Allied Carpets a few weeks ago, where crooked directors who steal from their shareholders are treated far more leniently by the criminal justice system than criminals who rob the same amount from a bank? There must be a tough and consistent approach.
	Finally, I turn to international standards. If it is correct, as the Secretary of State says, that British standards of practice are exceptionally high, how does she intend to protect those standards when harmonisation takes effect in 2005? Will she explain why it is, if British standards are relatively high, that in the months that have passed since the Enron crisis, the FTSE index in London has fallen even more precipitately than the Dow Jones index in New York?

Patricia Hewitt: We shall reduce the period for audit partner rotation from seven years to five, and extend the requirement of rotation to other senior members of the audit team. Those are two specific and, I believe, thoroughly desirable actions that we are taking as a result of the interim report.
	On competition, the hon. Gentleman will be aware that the Office of Fair Trading recently conducted a review of the market for audit and accountancy services. It reported on that in its report on competition and professions. As I am sure the hon. Gentleman will acknowledge, it found that small and medium-sized companies in the United Kingdom have an extensive choice of auditors and accountants. As the hon. Gentleman and the OFT acknowledge, there is much less competition in the market for large company audit and accountancy services. However, there was no indication in the OFT report that that produced a problem of inadequate competition.
	It is worth stressing that when we talk about this relatively concentrated market, we are talking about the largest firmssome national, but most of them internationalthat increasingly buy their audit and accountancy services from multinational firms in an increasingly global marketplace. It is not an issue for the United Kingdom alone, but one which the OFT will be examining and which I and my colleagues in the Treasury will be discussing with it.
	I agree with the hon. Gentleman about the need to broaden the pool from which companies recruit their non-executive directorsfar too few are drawn from too narrow a pool. That is precisely why my right hon. Friend the Chancellor and I invited Derek Higgs to conduct a review of the role and recruitment of non-executive directors. We await his findings with interest, and I shall return to the House on the matter in due course.
	As for fraudulent, criminal behaviour by a small minority of company directors, my Department acts with great vigour in investigating complaints that are brought to us, or of which we have become aware. Where necessary, we disqualify directors whose behaviour makes them unfit to hold such office. In the past two years, we have disqualified a couple of thousand company directors in pursuit of our powers.
	The hon. Gentleman referred to international standards. Our own Accounting Standards Board is already working closely with the international board, and with our partners on that board, to ensure that we get the best possible standards at an international level so that companies in the UK, in an increasingly global and interdependent economy, have the benefit of best-practice standards at an international as well as a national level. In this global and interdependent economy, although the problems on which we are particularly focused have arisen in the United States, the shock waves are felt in stock markets right across the world, and despite the underlying strength of our own economy here in the United Kingdom our own stock market is not immune from those shock waves.

Martin O'Neill: I thank my right hon. Friend for her statement. It is important that we all recognise that the Government are being seen to try and restore a sense of confidence and trust in a profession that has taken, perhaps, an undeserved battering, but a battering none the less in recent months.
	On the rotation of auditors, we must also take account of the audit office with only one client. Over-dependence on the one office was part of the problems of Enron, apart from the illegality involved. In Italy, firms are rotated for auditing purposes, but often the staff remain the same, because in a particular location there are not the people to undertake the work. We must be sensitive to the problem. It is not just a matter of partners and senior staff; there must be a more comprehensive look at the issue to avoid that situation.
	Lastly, does my right hon. Friend hope to incorporate in the new companies legislation, which has been circulated in draft form, the constructive proposals that will come out of the consultative process? Is it intended that before this time next year, we may have a companies Bill nearing Royal Assent, which will include the very creditable proposals that she made in her statement today?

Patricia Hewitt: I am grateful to my hon. Friend for those comments. On audit rotation, he is right to draw attention to the practical difficulties, in some cases, and the competition implications of the proposal for compulsory firm rotation. That is why we want to consider that and have the group consider it in more detail before we make a final decision. In any case, it is very important that commentators do not get fixated on one particular item that is being considered, when there is a package of measures that needs to be considered as a whole, because that is how it will have its effect.
	On the companies Bill, the Minister with responsibility for competition, consumers and markets, my hon. Friend the Member for Welwyn Hatfield (Miss Johnson), published the White Paper last week, including 200 or so draft clauses for a future companies Bill. We will, of course, examine closely the responses to that consultation and we will move ahead as speedily as we can to publish further draft clauses for what will be a major piece of law reformcertainly, one of the largest Bills that my Department or probably any other Department will have introduced. My hon. Friend will understand that I cannot pre-empt future Queen's Speeches, but I can say that we are determined to introduce that Bill as soon as we can, and to make that law reform in this Parliament.

David Ruffley: There is much to welcome in the right hon. Lady's statement. She will be aware of the report of the Select Committee on the Treasury this week, and its proposals on audit committees. We proposed that audit committees should be required every five years to consider whether the audit firm should be rotated, and that if the audit committee decided that there should be no such rotation, the reasons for that decision should be made clear to shareholders in a statement. Is the Secretary of State attracted to that proposal, and if not, why not?

Patricia Hewitt: I am grateful to the hon. Gentleman for his welcome for the statement. He is a long-standing member of the Select Committee. We will want to respond in detail to the Committee's report, which was published yesterday. I noticed in particular the proposal that the audit committee should consider rotation of the audit firm after five years and should report fully on why, if it does not do so, it has chosen not to do so. That seems a helpful and practical suggestion, and I have no doubt that the group will consider it carefully, as we shall.

James Plaskitt: I welcome my right hon. Friend's statement, and I am pleased that she has found time to read the Treasury Committee's report, as it has only just become available. We took important evidence from Sir David Tweedie, who chairs the International Accounting Standards Board, especially on the way in which the industry is financed, which is by raising income from companies. He gave examples of companies that have tried to put pressure on accounting firms, because they are paying the fees for the operation. That led us to conclude that an alternative structure for financing the accountancy industry should be examined, and we suggested that it be done on a similar basis to that which applies to the Financial Services Authority. Has my right hon. Friend had time to think about that recommendation?

Patricia Hewitt: I am grateful to my hon. Friend for those comments. We shall closely consider the Select Committee's proposal. I shall certainly not make a snap judgment on it, any more than I would on its other proposals. The Select Committee drew an analogy with the FSA. As I said, we will consider the funding arrangements for the Accountancy Foundation as part of the review of the regulatory structure.

William Cash: Does the Secretary of State accept that her proposals are greatly welcomed in the round by Conservative Members, but company law reform is a matter of enormous importance for capital markets and for the true value that can be placed by shareholders and others on the public interest. Does she agree that, in reviewing the duties of directors, auditors and others, it is imperative that an arrangement is made in company law to protect those people? They know what is going on inside a company at a given time, and they know in good time what is going wrong. They should be protected and insulated if they whistleblow and tell shareholders or the public in general what is going on. That was the key problem with Enron. Accountancy firms often have an intrinsic interest in the fee structure, and the Secretary of State could reflect on that. Would she be good enough to give me a response?

Patricia Hewitt: The hon. Gentleman raises an important point. A crucial part of our proposals for company law reform is to spell out in statute the duties of directors. One of the deeply unsatisfactory features of current company law is that it is almost impossible for a non-executive director to find out what his or her legal duties are, because they are buried in several different statutes and in case law. We are also proposing that independent directors should be able to get advice from Companies House about the application of those duties.
	On the hon. Gentleman's specific point about how we protect directors who are whistleblowers, we will consider whether the legal protection that we have already put in place for whistleblowers needs to be strengthened through company law.

Tam Dalyell: Is it generally true, or is there a soupcon of special pleading in relation to small auditors, that if non-audit services are divorced from auditing, the cost of auditing goes up not marginally but significantly? That problem affects many small companies.

Patricia Hewitt: I am not sure whether the provision of non-audit services is an issue for small audit firms. It has been raised as a matter of concern in relation to large audit companies that can secure substantial fees for non-audit services to clients for whom they also provide audit services. I am not sure that the same concern applies to small audit firms, which tend to concentrate on purely audit and accountancy services.

Adam Price: The Secretary of State is right to eschew complacency, but does she accept that doubts will persist for as long as the accountancy profession is effectively judge and jury in relation to complaints made against it, meeting behind closed doors so that there is no opportunity for the quality and extent of investigations to be evaluated?
	Will the right hon. Lady accompany her rather timid proposals with an undertaking to consider more radical ideas for reform, including the establishment of a fully independent regulatory system, a complete separation of audit and non-audit practice, making the issuing and audit of defective accounts an offence in law, and the imposing of fines commensurate with the financial costs of malpracticeto be paid to those affected rather than, as is currently the case, to accountancy bodies themselves?

Patricia Hewitt: I have already made plain our approach to the separation of non-audit from audit services. As for the investigation of complaints and breaches of the disciplinary rules, following the creation of the Accountancy Foundation we have seen a strengthening of the independence of the investigatory system. Nevertheless, I am not satisfied with the present position, which is why I announced this afternoon that we would review the entire regulatory structure. One option that may be considered is a move to the fully independent regulatory system that the hon. Gentleman suggests.

David Taylor: I draw the House's attention to my entry in the Register of Members' Interests as a member of the Chartered Institute of Public Finance and Accountancy.
	May I congratulate my right hon. Friend on her statement, and on the priority she is giving to driving up standards in corporate governance and financial reporting? However, following the remarks of the shadow Secretary of State for Trade and Industrya preface that I never thought I would use in this placeI think there is a case to answer in relation to the treatment of the private finance initiative and public-private partnerships. I think that the question of the National Audit Office, and that of the international standards of best practice that my right hon. Friend mentioned, need to be re-examined.
	Of course it is a bit rich for the Conservatives to talk of something that originated in the dying days of the Major Administration when they had lost control of public borrowing, butas is made clear in early-day motion 1668there is great unease in the profession, which fears that this is a device to wipe legitimate Government debts from the Government balance sheet. If we are to have a greater effect on the matters that my right hon. Friend has cited, our own house ought to be clean and clear.

Patricia Hewitt: Public-private partnerships are not, as my hon. Friend seemed to imply, a way of trying to keep public sector debt off the balance sheet. PPPs are designed to add private finance to infrastructure investment where it is badly needed, and to introduce more innovation in the provision of public services along with better management of, in particular, large-scale infrastructure projects.
	Complications arise when it comes to assessing the risk-sharing that takes place in PPPs, but I think we are getting better at that. I entirely endorse the principle of transparency commended by my hon. Friend, which is precisely the principle that my right hon. Friend the Chancellor has adopted.
	Increasingly, PPPs are fully reflected on the public-sector balance sheet. The Office for National Statistics, which helps to audit the risks and the accounts, has been placed on an independent footing by the Government.

Andrew Tyrie: I do not think that that will do. Everyone who has looked into the matter knows that the treatment of the PFI and PPPs in the public accounts is manifestly inadequate. Everyone knows that a number of contingent liabilities should almost certainly score in the accounts, but they do not. Following the many letters of comfort that have already been written, surely some value should be placed on them and they should score above the line, as they would in many cases in the private sector. When I raised this matter with the Chancellor, he said We are following best private-sector practice. The obvious rejoinder was We have just had some Enron economics.
	In every other respect, unfortunately, I rather agree with what the Secretary of State has said. I thought her statement excellent, and I feel able to support it. My only question is this: a number of the proposals will involve a substantial increase in the compliance burden on firms so when the proposals are presented, will the Government publish a rigorous assessment of the full compliance burden?

Patricia Hewitt: I simply do not accept the hon. Gentleman's remarks about the standards of public accounting. The fact is that we are one of the very few countries that fully comply with the international, generally accepted accounting practice standards for public-private partnerships. We are following international standards and international best practice in that respect.
	On the hon. Gentleman's other point, which was rather more relevant to my statement, we are looking and will look carefully at the compliance costs. But I repeat what I said in my statement, and I hope that he will accept it: a more robust regulatory framework and a system of financial reporting in which people can have full confidence is hugely to the benefit of our businesses, our investors and our capital markets alike.

Mark Lazarowicz: I particularly welcome what my right hon. Friend said about strengthening the rules on the consultancy work that auditors can undertake, at least in the case of larger companies. I urge her to give guidance to the working group to make those rules as strong as possible and to move to a position where the general rule is that auditors should not carry out consultancy work for the firms for which they carry out an audit. Does she accept that there will always be a problem with public confidence and a risk of conflict of interest when an accountancy firm receives large fees from a company to act as an auditor while receiving fees for non-audit services whose very continuation depends on the audit wing of the firm giving the company a clean bill of health?

Patricia Hewitt: My hon. Friend makes an important point. Some principles are already in place, in particular the rule that auditors should not make management decisions or audit their own work, but I think that the group's approach is sensible. It will look at a much more careful definition of the kind of non-audit services that it would not be acceptable for auditors to providethose that do not cause any threat to the independence of the audit and those that may be acceptable but only with proper safeguards. A more careful analysis of the different kinds of non-audit services that may be provided by audit firms will provide the basis for much better and more transparent decision making in the sector.

Michael Moore: As a chartered accountant who qualified through the Institute of Chartered Accountants in Scotland, I support the proposals in so far as they are set out here today. Does the Secretary of State agree that regulation of the profession is the key to restoring public confidence in financial statements? Does she accept that the current situation is a mish-mashnot even the accountancy bodies and professionals understand how it operatesand that until we have Government-sponsored regulation, the confidence of those who use accounts will not be regained?

Patricia Hewitt: I agree with the hon. Gentleman that the current situation is pretty complicated. That is one reason why we are taking a fresh look at the whole structure of the professional oversight of accountancy, the regulatory framework and the oversight of that regulatory framework. I am not particularly attracted by the idea of the Government becoming, presumably, the sole supplier of audit regulation, but we will look at that as part of the review of the regulatory framework that I have announced this afternoon.

Jonathan Djanogly: Will the proposals to have only independent non-executive directors on audit committees apply only to companies on the full list of the stock exchange? Generally speaking, I am concerned about the consultation period, in so far as it looks as though the proposals are being to some extent bundled up with the companies Bill. That Bill was sent out for consultation for several years and I am sure that it will be a lot better because of that. There is concern that the time in which these complicated issues will have to be reviewed by the profession and by other stakeholders will not be adequate.

Patricia Hewitt: Obviously, the proposals relating to audit committees will apply only to those firms that have to have audit committees, and clearly that does not include every firm.
	On the speed of decision making, as I have said before, we should not rush into knee-jerk reactions to a problem that has arisen in the United States, where there is a somewhat different framework. At the same time, it is important that we build on the work already donein some cases, over a significant periodby the various existing regulatory and professional bodies. Where there is a clear recommendation from our co-ordinating group that action is desirable, we should take it. The measures that I announced this afternoon fit well within the much broader framework of company law reform that we are pursuing, and which was preceded by extensive consultation.

Jonathan Sayeed: Some have suggested that a WorldCom or an Enron could never happen here. It is instructive to note that the further away the proponents of that proposition were from the City of London or from company management, the more certain they were of it. I am less sanguine. Does the Secretary of State accept that accountancy standards bodies should look at the treatment of goodwill and capital asset valuation, particularly by those companies that have grown through multiple acquisitions?
	Does the Secretary of State understand that an accountancy firm acting as an auditor has a principal responsibility to the shareholder, whereas an accountancy firm acting as a consultant has a responsibility to the company and its directors? As the interests of directors and shareholders often diverge, I am disappointed that she has not made rather more clear the view that there should be a separation of those two provisions.

Patricia Hewitt: I agree with the hon. Gentleman's first pointwe certainly should not be complacent about the situation here. We are not, and that is why we are taking the action and commissioning the further work that I announced this afternoon.
	The issue of how goodwill and capital assets are valued has not so far been raised in the reviews, but I am certainly happy to look further at it. On audit and non-audit services, it is precisely the different interests and responsibilities, and the conflicts that can arise between them, that give rise to people's concerns about the fact that audit companies are making so much money from selling non-audit services to their audit clients. There are arguments on both sides of this complicated issue. Not every non-audit service necessarily raises a conflict of interest with the provision of audit services as well. That is why we have asked the group to look at the matter in more detail and take further evidence before we make a final judgment on whether there should be tougher regulation.

George Osborne: Further to the question raised by my hon. Friend the Member for Chichester (Mr. Tyrie), does the Secretary of State agree that the Government should lead by example on transparency of audit? Is she aware that the National Audit Office and the Public Accounts Committee, on which the Financial Secretary sits, are both very concerned about the fact that Network Rail's huge liabilities do not appear on the Treasury's books? When it comes to stamping out Enron-style accounting, should not the Government practise what they preach?

Patricia Hewitt: As the hon. Gentleman will doubtless be aware, the judgment of the Office for National Statisticswhich recently looked at precisely this issue in respect of Railtrackhas been backed by Eurostat, an independent international body.

David Laws: Does the Secretary of State accept that, contrary to the impression given in the press and in her statement today, the Treasury Committee came out in favour not of mandatory rotation of audit firms, but of the principle of rotation, saying that the decision should be left to strengthened audit committees? Is that not precisely the sort of third-way solution that should appeal to the Government and to her?

Patricia Hewitt: Of course it is already open to audit committees to choose to rotate audit firms but, as I said, there are strong views for and against mandatory rotation of audit firms. There is, on the one hand, a suggestion that some of the worst problems arise in the early years of a new auditor; on the other, there is the assertion that one finds what is going wrong with a new auditor or financial director.
	It would be sensible for us, through the co-ordinating group, to look at the evidence more fully before judging whether to make the rotation of audit firms mandatory as well as the rotation of audit partners and senior audit teams, on which we have already decided.

Points of Order

Roy Beggs: On a point of order, Madam Deputy Speaker. I wish to raise an issue of which I have given prior notice to Mr. Speaker. I have also given prior notice to the hon. Member for Strangford (Mrs. Robinson), in contrast to her attack on my right hon. Friend the Member for Upper Bann (Mr. Trimble) in her speech on Monday night.
	On 18 July this year, the Newtonards Chronicle published an article entitled, Robinson lashes Belfast agreement in Commons, in which she also attacked my right hon. Friend the Member for Upper Bann, the leader of the Ulster Unionist party. The piece began:
	Strangford MP Iris Robinson has addressed the House of Commons on the Opposition day debate on the Northern Ireland peace process.
	I was most confused when I read those words because, having attended the debate, I had no recollection of the hon. Member being called. In fact, a later close inspection of the Official Report confirmed that she had not been.
	The hon. Member for Strangford did speak in Monday evening's summer recess Adjournment debate. Another inspection of the Official Report revealed that her remarks were almost identical to the speech that the Newtonards Chronicle obviously believed she had delivered to this House almost a week ago.
	Madam Deputy Speaker, I seek your ruling on two specific matters. First, do you consider it appropriate for an hon. Member to claim to have delivered a speech in this House when that was not, in fact, the case? Secondly, is it not a serious breach of parliamentary convention for an hon. Member to release to the press a word-perfect copy of their intended remarks to the House in advance of them actually being deliveredat least four days in advance, in this case?

Madam Deputy Speaker: On behalf of the Speaker, I thank the hon. Gentleman for giving Mr. Speaker notice of his point of order. Mr. Speaker has inquired into the matter.
	It appears that the speech quoted in the press was given in the House after it had been printed in the newspaper. What is published in the press is primarily a matter for the newspaper and for the hon. Member for Strangford (Mrs. Robinson). But this is not a practice that the Chair would encourage.

Graham Brady: On a point of order Madam Deputy Speaker. This is further to a point of order that I raised yesterday about an incident in which a written answer to me was read out by a Minister in another place before it had been delivered by the Department to me. Baroness Ashton has written me a letter of apology, which I fully acceptI do not regard her as in any way responsible. None the less, may I seek a ruling from the Chair that such conduct is unacceptable and that Departments are expected to achieve a better standard in dealing with answers to right hon. and hon. Members?

Madam Deputy Speaker: It is most unfortunate that the terms of the answer to the hon. Gentleman's question were given in the other place in the way that he described yesterday, before the question had been answered in this House. As he has said, he received a holding answer to the question on 22 July and the Department is to reply fully today. The Minister concerned has written to the him. May I suggest that he leaves it at that?

Jonathan Sayeed: On a point of order, Madam Deputy Speaker. It has been reported in the press that a number of questions tabled by right hon. and hon. Members have been lost, mislaid or just not answered by Ministers. Will you inquire of the Government during the recess how many questions are outstanding and check that all those questions have been answered by the end of the recess?

Madam Deputy Speaker: I regret to inform the hon. Member that that is not a matter for the Chair. Perhaps hon. Members who have outstanding questions will pursue that with the Departments or the Table Office.

Simon Thomas: On a point of order, Madam Deputy Speaker. May I draw your attention to the increasing practice of releasing unfortunate announcements on the last sitting day? There are 170 planted questions on the Order Paper today. One of them is the announcement of the loss of 400 jobs in the defence industry, including 100 at West Freugh in Scotland, 150 at Aberporth in my constituency, and the closure of Llanbedr in the constituency of my hon. Friend the Member for Meirionnydd Nant Conwy (Mr. Llwyd). The arrangement of the business has been such that we do not have a motion for the Adjournment of the House today under which we could raise the announcements that the Government like to release on the last sitting day. Is it in order to describe that arrangement of the business and the way in which that announcementwhich will affect 150 of my constituentshas been made today as a despicable act?

Madam Deputy Speaker: I am afraid that the hon. Gentleman will be disappointed with my reply, because I must tell him that the practice is entirely in order.

David Rendel: On a point of order, Madam Deputy Speaker. The Chancellor announced the outcome of the comprehensive spending review on Monday last week and I presumed that comprehensive meant that it covered the whole of Government spending. Following the statement, on Tuesday the Secretary of State for Education and Skills said next to nothing about spending on higher and further education. I tabled a written question for answer on Monday of this week asking how much spending was expected in the HE and FE sectors for the current year and next year according to the previous CSR, and for the next three years according to the new CSR. On Monday, the Secretary of State's answer was the standard one that she would reply as soon as possible. This afternoon, on our last sitting day, I received a further answer, which gives the figures according to the previous CSR, but says that figures for the present CSR will be announced later. Neither part of that answer can conceivably have been unknown to her when the answer was provided on Monday. Moreover, the actual figures that she says will be announced later must have been calculated long since. Is it acceptable for the Secretary of State to refuse to give out figures in response to a Member's written question simply because it would be embarrassing for her to do so at this stage and because she would rather hide them until a time of her choosing?

Madam Deputy Speaker: I am somewhat pleased to say that the content of answers from Ministers is not the responsibility of the Chair, but I note that the Secretary of State is in her place and has no doubt heard the hon. Gentleman's comments.

BILL PRESENTED

Domestic Combined Heat and Power (Reduction in Vat)

Alan Simpson, supported by Sir Sydney Chapman, Mr. Andrew Stunnell, Dr. Brian Iddon, Llew Smith, Sue Doughty, Dr. Ian Gibson, Mr. Simon Thomas, Mr. David Drew and Julia Drown, presented a Bill to reduce the rate of value added tax levied on domestic combined heat and power units and on the costs of their installation: And the same was read the First time; and ordered to be read a Second time on 14 November, and to be printed [Bill 192].

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Local Government Finance

That the Local Government Finance (England) Special Grant Report (No. 105) (HC 1069), on Invest to Save Budget Round 4 Projects and Local Government On-Line, which was laid before this House on 9th July, be approved.[Mr. Sutcliffe.]
	Question agreed to.

Orders of the Day
	  
	Education

Lords Reasons for insisting on certain of their amendments to which the Commons have disagreed, considered.

Clause 10
	  
	Powers of governing bodies to form or invest in companies to provide services etc

Lords Reason:
	The Lords insist on their Amendment No. 12 and disagree to the Commons Amendment No 12A for the following Reason
	Because the provisions on the formation of companies are not good practice and have not been thought through.

David Miliband: I beg to move, That this House insists on its disagreement to Lords Amendment No. 12 but proposes the following amendment (a) to the words restored to the Bill by that disagreement, in page 7, line 12, at end insert
	'(6A) In exercising the power conferred by subsection (5) the governing body of a maintained school shall have regard to any guidance given from time to time (in relation to England) by the Secretary of State or (in relation to Wales) by the National Assembly for Wales.'
	I am delighted to welcome back the shadow Attorney-General, in his new roving brief, to his now frequent place on the Front Bench in an education debate.
	I first wish to put on record our regret at the unfortunate incident yesterday when the hon. Member for Altrincham and Sale, West (Mr. Brady) heard an answer to a question to which he had not yet received a reply. That was an administrative slip by the Department and we are sorry about it. I assure the hon. Gentleman and the House that no discourtesy was intended.
	I shall now focus on the substance. We shall be disagreeing here, in the next hour, on one simple issue: whether we turn agreement in principle to support innovation, into practice. The issue is whether maintained schools should have the same freedoms to form and participate in companies devoted to educational purposes as private individuals, the private sector, independent schools and city technology colleges already do. This is a matter of freedom and of fairness. We often talk about both those areas; now we can legislate for them.
	These clauses will put at the disposal of schools a convenient legal form to buy services at keener prices or sell goods and services to spread best practice, and the gainers will be pupils. The question is not whether there are any activities for which it is essential for schools to form companies, but whether the company structure can make it easier for schools to do so. The clear answer is that it can.
	Companies enable groups of schools to establish a single legal identity, overcoming the problem of multiple contracts that would otherwise exist. They provide a vehicle for schools to share expertise with other schools; to benefit from economies of scale; and, crucially, to limit their liability. They are a trusted means by which some of our best schools can spread good practice and good ideas around the education system.
	Labour Members believe that if schools think that it will be useful for them to form companies, they should be free to do so, subject to some important safeguards. They must not be compelled to, but they can.

Phil Willis: Would the hon. Gentleman clarify for the House whether a company that is set up under the Government's proposals can trade outside the education world; in other words, can it sell services into the private sector?

David Miliband: I am happy to answer that question. The matter was discussed at some length in the other place, where it was made absolutely clear that the purpose of setting up a schools company was to trade educational services if it was a service delivery company. If it was a purchasing company, obviously it would be purchasing services for the benefit of schools, but this is for educational purposes.

Phil Willis: I am grateful to the hon. Gentleman because it is an important point. Would he regard, for instance, a grounds maintenance contract as such, and if so, would the company set up to offer a grounds maintenance service to a group of schools also be able to offer it to the local hospital, or to private residents?

David Miliband: The potential for private companies to offer ground maintenance contracts already exists. The measure that we are discussing now would allow schools to do that. It would not allow them to offer such services to hospitals or to other bodies, as the hon. Gentleman said; this is about schools coming together to offer services, of a widely varied nature, to other schools. That is the point that we are making. I think that that is a clear answer to the hon. Gentleman.
	Let me consider the four objections that have been raised in the nearly 10 hours of debate on these issues. The first objection is that these clauses might be a means by which the private sector could take over schools, but that completely ignores a fundamental point: there are clear restrictions on the role of any company in schools. The fact that a school may be a member of a company does not loosen these restrictions in any way, and where schools contract with companies, they work under the orders of the governing body.
	For a very long time, governing bodies have had the power to contract out many things, such as catering or teacher supply. What they cannot do is relieve themselves of their duty to conduct the school. The fundamental duty to run the school always remains with the governing body, which retains the overall responsibility for who works at the school. The school company clauses do not change that a bit. School companies will be able to supply services to schools in the way that private sector companies currently doneither more nor less. Schools run schools. Private sector companies can currently help them. In future, if this legislation is passed, school companies will also be able to do so.
	The second objection that has been raised is that in some way the existence of companies will increase the liabilities that the public sector might face. But that ignores the fundamental point that one of the main advantages of companies is the limitation of liability. If a group of schools conducts an activity as an unincorporated association, they face unlimited liability. If they incorporate as a limited company, they can limit that liability.
	In that context, it has been said that the LEA will be liable for a company's debts. Let me address that point. That is true only of purchasing companies. The key point is that that is no different from the current position. LEAs are already liable for the purchasing decisions of schools. There will be no changeLEAs will remain liable for purchasing debts of schools, whether the schools purchase individually, or through a company as an intermediary. The only difference is that in purchasing with other schools through a company, a school can benefit from economies of scale to get better prices.

William Cash: The Minister is talking at some length, and I have no doubt that he will develop this point, with regard to the statutory liabilities of a local education authority. In fact, in his answer to my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady), he says:
	It would not . . . be possible for a company or . . . other body to 'take over the running of the school', because the governing body cannot contract out the duty to conduct the school.
	Moreover, he seems to avoid the fact that this provision in clause 2 clearly enables the Secretary of State by orderby statutory instrumentto confer on the applicant exemption from any requirement, including statutory duties imposed by education legislation, or to relax any such requirement. I am sure that the Minister would appreciate that in fact this provision, in this Bill, is new and novel, and is not dealt with under clause 20, and that therefore there will be a significant difference, once this Bill has passed, in relation to the statutory liabilities of education authorities. The Government have it in their own Bill and there it is in the proposed statutory instrument.

David Miliband: The first thing that I should point out is that I was criticised on the last occasion for not speaking for long enough, so I hope that the hon. Gentleman is not chiding me for detaining him for too long.
	Secondly, the running of a school does remain the responsibility of the governing bodythat is an important pointwhatever contracts a governing body enters into. That is the situation now and that will be the situation in the future. In relation to the liabilities

William Cash: The Minister really cannot get away with that. He talked about in the future, but in the future, under the provisions of clause 2, it is quite explicit that there is the capacity for the Secretary of State to make provision exempting applicantswhich includes local education authorities or qualifying schools
	from any requirement imposed by education legislation;
	or
	relaxing any such requirement
	and it applies also to statutory instruments and all subordinate legislation. It cannot apply in future because we do not know, unlike the Minister, how the Government are proposing to apply the legislation.

David Miliband: Unquestionably, now and in the future, governing bodies are the people who will remain responsible for running schools. There is no disagreement about that. As we discussed last week, the issues in relation to clause 2 refer to exemptions that relate to education law. The situation[Interruption.] Will the hon. Gentleman let me finish my point? The situation in relation to governing bodies remains. The statutes governing the role of the governing bodies are laid out and they will continue to be in force. So I do not think that the hon. Gentleman[Interruption.] If the hon. Gentleman is unhappy with the detail that I have given him, I would invite him in his speech to develop his point at some length; I will certainly come back in my winding-up speech to any new issue that he raises.
	I was explaining about the issue of liability. Any company wishing to borrow money will need the LEA's consentwe discussed that point at some length on a previous occasionso the prospect of any company getting into debt is minimised by the sensible provisions in the Bill.
	Let me deal with the third objection that has been raised by hon. Members. It is argued that these clauses provide new ways for profit to be taken from the education systema point that has been raised by the hon. Member for Harrogate and Knaresborough (Mr. Willis). In fact, the purpose of these clauses is to do the oppositeto allow any profit that is gained from selling services to remain in the education system, rather than going out of that system into the private sector.

Phil Willis: Will the hon. Gentleman give way?

David Miliband: If the hon. Gentleman will forgive me, we have only an hour to debate this and I shall be criticised later for taking too much time if I am not extremely careful. Will the hon. Gentleman let me make my point? I promise him that I shall return to it once he has made his speech.

Phil Willis: That will be too late.

David Miliband: No; the hon. Gentleman has already had one bite at the cherry. I shall see whether I can answer his point later.
	What the clauses do allow for the first time is that where a school has a valuable idea that could benefit other schools, it can get a proper return for its idea. For example, if a school develops some curriculum materials and wants to market them, it can do so. It can go into partnership with others and sell a CD-ROM, and can make a profit. There is nothing new about companies selling CD-ROMs to schools to make a profit. What is new is that the school can share in that profit. These clauses introduce new ways to make a profit.
	Finally, it is said that in some way these clauses will increase the work load of governors or head teachers. But I simply say that whether or not to get involved is entirely at the discretion of the schools themselves. We trust them to make the right judgment about whether getting involved in such ventures is an intolerable imposition on them. If a school decides that getting involved will be beneficial, it is taking the decision that any work involved will be worth while given the return on the investment. 6 pm
	Against all that we have heard no substantive objections in principle. In fact, we have heard protestations of support for those clauses. A number of detailed points have been made to us. They are mainly utterly spurious, but I should just run through them. It has been said that the Government have a hidden agenda to have companies take over the operation of schoolswrong. It has been suggested that those proposals will, in some way, increase the exposure of schools to liability for sports injuriescompletely wrong. It has been suggested that these proposals might create liabilities in relation to school trips abroadwrong.
	It has been said that school companies might be able to start trading with the publicwrong. It has been suggested that disreputable persons, in the words of the hon. Member for Stone (Mr. Cash), might somehow get their clutches on schoolswrong. I do not know whether he was thinking of some of his Opposition colleagues when he was spoke of disreputable persons, but I promise him that there will be a proscribed list, and he can send a long series of suggestions to add to it.

William Cash: The hon. Gentleman knows perfectly well that the Minister in the other place made it quite clear that, in fact, the Government would respond to the proposals that we made last week, and they have done so by proposing that there will be changes in those persons who can become members of companies. I think that we won that point, does not he agree?

David Miliband: If the hon. Gentleman consults the record, he will see that I answered him very fully, and I look forward to his list of proscribed persons, or that of any hon. Member, when the time comes.
	To pick up the hon. Gentleman's last point, we have listened carefully as these debates have gone on over nine and a half hoursnine hours and 31 minutes, in factand important changes have been made, as a result of points made in the House and in the other place. We believe that we have met the concerns that have been raised.
	I believe that this now boils down to a question of trust. The Opposition may think it a question of trust between them and us; it is actually a question of trust between central Government and schoolswhether or not we trust our schools to do sensible things with the freedom that we propose to give them.
	It is impossible and undesirable to legislate for every possible eventuality. It is much better to put in place a sensible framework to manage risks and to leave our schools and LEAs to the task of making the proposals work. [Interruption.] I am glad that the hon. Member for Ashford (Mr. Green) has now joined us. We have not had the pleasure of his contributions so far during this debate, but he arrives at a very opportune moment.
	Although the Opposition talk about free schools, they argue against this perfectly sensible freedom. They talk about enterprise, but they vote to deny opportunity to enterprising schools. They say that they want less bureaucracy, but they oppose a simple option for schools that want to work together. They say they want innovation, but they deny schools the chance to develop and share new ideas.
	When we decide the question of school companies today, we decide also whether schools and the public sector should have the same ability to gain from good ideas as the private sector already has. It cannot be right that, while the private sector can profit from its ideas, schools are not even allowed to compete. These proposals put that right. So the dividing line today is trust. Do we trust our schools? During a Committee sitting that I remember well, the hon. Member for Altrincham and Sale, West described these proposals as exciting, and he was absolutely right.

Graham Brady: The Minister was not excited; he was signing his letters.

David Miliband: I assure the hon. Gentleman that I was extremely excited when he said that in Committee.
	Lord Baker of Dorkinga figure who should bring cheery smiles to the faces of Conservative Membersdescribed these proposals as a very welcome development, and he was right. I do not want to scare off too many of my hon. Friends by continuing that litany, but there has been cross-party and Cross Bench support for these proposals. The issue is: do we now trust our schools to make a reality of the freedoms that we wish to give them?
	Do we allow them the opportunity to decide for themselves; or do we prevent them from doing so now, before we have even given them a chance? The Government say, yes, we should give them the freedom; the Opposition say no, even though they claim to say yes. I hope that the hon. Member for Altrincham and Sale, West and other hon. Members will join the House in voting to trust schools today.

William Cash: I think that the Minister is perhaps in danger of misleading himself a little bit. For example, these proposals have been rejected twice by the House of Lords for extremely good reasons. I pay tribute again to the shadow Ministers in the House of Lords and, indeed, to my noble Friend Lord Kingsland, who came in and buttressed our arguments. This is not just a matter exclusively for the Conservative party because we have had significant support from the Liberal Democrats. Indeed, the arguments that have been developed have further endorsed those that we have put forward over a prolonged period.
	I have to say that, yet again, I am disappointed by the Minister's response. He is not dealing with the mechanics; he generalises and says that this is what the Government would like to try to achieve. He talks about trust; but, in fact, the Government are not telling us why we should trust them. Why should we trust a Government who are clearly hiding behind the Bill, to which they have proposed to make changes without coming clean? For example, the Minister still has not answered the question that I asked with regard to clause 2.
	It is absolutely crystal clear that, under clause 2, the Government propose to make exemptions and disallow the statutory liabilities that currently apply to schools, including all qualifying schools and local education authorities, and to enable them to be exempted by statutory instrument from their statutory requirements relating to education, and the Minister knows that. He has just referred to the question of what would happen in the future, but he also knows that he has given me no answer at all about whether the question of the application of those statutory instruments would apply to school companies.
	Furthermore, the Minister may be aware of the article in The Observer. [Interruption.] This Minister is very extraordinary; when he comes up against something that he does not like, he either smiles disingenuously or he waves his hands in an extraordinary fashion. The fact is that in an article headlined, Blairite blueprint to turn schools into companies, Gaby Hinsliff dealt with a very substantive issue. She said:
	The plans for a range of new non-profit-making companies across public services have been drawn up by Trade and Industry Secretary Patricia Hewitt with three other Cabinet Ministers.
	I should like to ask the Minister whether he will deny that. The articles says that
	Hewitt is working with . . . the Education Secretary . . . and the Home Secretary on a consultation paper to be drawn up.

Ivan Lewis: A secret plan.

William Cash: It is not a secret plan; it is out in the open now.
	The Minister for School Standards knows perfectly well that such proposals apply not only to the Bill, but to Network Rail, the tube and hospital contracts as well. The bottom line is that the article says:
	It is seen in Downing Street as a 'third way' between part-privatisations that have infuriated trade unionists, and the old model of a public sector too closely run by Whitehall.
	The fact is that the Bill is intended to try to allow people to dodge their educational liabilities, as laid down by statute up to and including the Bill, and to try to create what we regard as perfectly reasonable proposals if only they could be made to work.
	Commercial freedom for school companies would be proper only if they could overcome the obstacles that we have already described. I set out those obstacles in the debate last week, and they include the problems of over-regulation, the problems of companies having to employ accountants and lawyers and the problem of liquidation when a company goes bust. Neither the Minister nor anyone in the other House has yet addressed those questions.
	I should be grateful to the Minister if he would address the points that I made last week with regard to what happens when a company goes bust. We have had no answers to those questions. No answer has been given by the Government to explain how LEAs will carry out their obligations to support any school that goes bust. There is no indication whatever about how the redundancy will be dealt with, about whether the creditors will be paid out or about the impact on small businesses.
	We have asked the questions, but we have received no answers. The plan fact is that the Minister and the Government are incapable of answering those questions; otherwise, by nowthis must be the third, fourth or fifth time that we have put themthey would have come to the House and attempted to explain them.
	There has been no explanation. When the Minister talks about the meaning of the words in the Bill, he should be reminded of Lewis Carroll, whose character Humpty Dumpty said to Alice that words mean what we choose them to mean, and that the question is who is to be master, that is all. That is what lies at the root of this problem. The Government have a Bill, they have a majority, and they will, one might assume, get the Bill through this afternoon. It will then go back to the House of Lords, where they have been defeated twice. The schools company provisions go to the heart of the manner in which the Government intend to carry through this Education Bill. We accept that it applies to groups of schools, but the bottom line is that it is an inadequate way of dealing with the problems that have arisen, as expressed repeatedly in both Houses in previous months. The Government have not given us any answer whatsoever. No answers have been given to me, to my noble Friends Lord Kingsland and Baroness Blatch, or to the Liberal Democrat spokesperson in the House of Lords, Baroness Sharp.
	In her answer to the proposal in another place that this matter should be considered again, Baroness Ashton of Upholland said:
	I shall make the positive case for allowing schools the freedom to join companies. The argument is simple and one in which another place sees considerable merit. It is that this is another way of giving schools more freedom, more opportunities for partnership and more room to share good practice.
	That is what the Minister said just now. The problem is in relation to Baroness Ashton's comments that the general powers are already contained in the School Standards and Framework Act 1998, and that companies can already be created to facilitate the running of schools. What the Minister completely fails to understand is that the change that the Bill introduces does not simply allow groups of schools to join together. The combination of clause 2 and clause 20, which is prefaced by the words,
	Subject to any other statutory provisions,
	leaves a hole with which the Government are not prepared to deal. They cannot and will not tell us how in futureto use the Minister's wordsthey propose to use the powers to exempt local authorities from their current statutory liabilities. Were the Bill to go through with these clauses in it, a new regime, of course, would arise. The Minister has a responsibility, however, to explain to the House exactly how clause 2 will work, and to put that in the framework of these provisions.
	Turning to the objections that were raised in debate in another place, Baroness Ashton said that
	there is nothing in the creation of a limited liability company that would increase the liability for the public sectorquite the opposite.
	Again, the Minister referred to that in embryo. The problem is that it is not the creation of a limited liability that would increase the liability for the public sector necessarily but the consequences of going bust. That is our point. Baroness Ashton continued:
	Schools may not transfer assets to any other body or person without receiving proper consideration.
	If a company has gone into liquidation, however, it will not, of course, transfer its assets. It will be dealt with by the consequences of liquidation. The Minister owes us an explanation on that account, too.
	In relation to a school company failure, Baroness Ashton stated:
	If a school company fails, the liability of the company member is, in the case of a company limited by shares, limited to the unpaid amount on the sharesif anyor to the nominal amount of the guarantee, in the case of a company limited by guarantee.
	She continued:
	During our debate, there seemed to be a sense that there was something surprising about that. There is nothing in any way unusual about it.
	What she completely failed to appreciate, howeverI shall ask the Minister to respond to thisis the impact on the schools. That is the real difficulty. She went on:
	Noble Lords will know that, to minimise the likelihood of a company's getting into difficulty, we said that the LEA would have a role as supervising authority for the companies.
	Again, that does not deal with the fact that it is not a question of minimising the likelihood of a company getting into difficulty; it is a question of whether we can prevent the company from getting into difficulty by taking appropriate action at the right time.
	I must now admit that some progress was madethe Baroness offered a further safeguard, to which the Minister did not refer, which greatly surprised me. She stated:
	We have decided that, under the regulations, companies will provide an interim financial report to the supervising authority as well as annually audited accounts.
	I welcome that. It reflects to some extent, perhaps, my remark that we had to know before a company went bust what its financial position was. It is certainly true that an interim financial report and audited accounts would be a step in the right direction. That does not, however, alter the ultimate question: if a company goes bust, what will happen?
	The question of profits, which the Minister raised with my hon. Friend the Member for Altrincham and Sale, West, was dealt with in the other place in previous debates. We have still not had a proper answer to the questionseveral contradictory answers were givenof where the profits would go. One Minister says that the profits will go back into the school, while the other says that the profits will be shared. Baroness Ashton stated:
	The profits will be shared, and school members of companies will receive their due amount.[Official Report, House of Lords, 23 July 2002; Vol. 638, c. 22023.]
	Will the Minister explain exactly what the Government's position is on the question of profits, and for what purpose those profits will be used? Will he also deal with the question of what would happen if there are losses? That is the other side of the equation.

Andrew Turner: Does my hon. Friend accept that what the Minister seems to misunderstand in saying that schools should be able to make a profit is that the other side of a profit is the risk? People and private companies who make profits generally do so by risking some of their assets. If, for instance, a school company were to publish a CD-ROM, it would risk money in publishing that CD-ROM, which it may not recover. That lossthe company may even have borrowed money to pay for ithas not been explained by the Minister.

William Cash: I am grateful to my hon. Friend for that point, which also relates to a point that was raised by the noble Lord Dearing. He asked what would happen in relation to the capital and the servicing of these companies. He asked a very important question, which has not been answered, and which I ask the Minister, again, to answer. What skills will be available to these companies? From where will they get advice? Do they have the kind of skill to be able to assess the risk to which my hon. Friend the Member for Isle of Wight (Mr. Turner) refers, which, in certain cases, could be very considerable in terms of capital outlay? Are they capable of making the right decisions? Furthermore, will they be able to get access to the capital? I think that the noble Lord Dearing stated that he, or somebody that he knew, had come across circumstances in which someone who had engaged in CD-ROM activities tried hard to transfer the project into the private sector, but, unfortunately, had neither the capital nor the skill to be able to do so. My hon. Friend therefore asks an important question.
	The Minister also referred to insurance liability in his opening remarks. We do not need to go into all the points that I placed on the record in the previous debate that we had on this issue. However, when a company overtrades or faces legal liabilities, he simply cannot say, Oh, well, insurance and school trips do not come into this. The fact is that liabilities can accumulate from a variety of sources and a company could be afflicted by substantial liabilities. If it gets into difficulties, what will happen in practice?
	The Minister also touched on the membership of the companies. We have made slight progress on this issue. Lord McIntosh was replaced by other Ministers after a long stint dealing with these issues.

David Miliband: It will be the hon. Gentleman next.

William Cash: There is no prospect of that. We are dealing with the issue extremely effectively, and the Minister may find that he is replaced if he does not do a bit better.
	The bottom line is that Lord McIntosh referred to crooks, but the Minister seemed to dismiss that suggestion. He seems to think that there is no question of crooks taking over schools, but Lord McIntosh clearly thought that that was a possibility. I will not repeat what went on in another place, but it is clear that the Government have conceded that the individuals who will not be able to join companies will be those who are not currently permitted to be school governors or to teach. That is a step forward in response to our representations, and we are partially grateful. However, it took an intervention from me for the Minister to recall what was said in the other place. As we are now dealing with the same clauses, I presume that what was said in the other place will now be binding on him. I would be grateful for confirmation of that.
	The Minister also has a responsibility to explain the manner in which governing bodies will operate. In exchanges with my hon. Friend the Member for Altrincham and Sale, West and in relation to the written reply that was held up, the question of whether the governing body can or cannot contract out of the duty to conduct the school raises an issue in relation to clause 2. The Minister therefore has an obligation to the House to explain it. In particular, how can anyone prevent a school from delegating functions to a company? If it did, what would happen? That also raises the question of who foots the bill. Is it intended that staff will be brought insupply teachers and othersand, as a matter of principle, do the Government intend to dispense with existing staff when, for example, they find that the school does not operate in a way that they would like? Is it possible that the school would end up with locums and supply teachers? What do the unions think about that?
	Throughout the entire proceedings on the Bill, Ministers have completely failed to answer the questions that I have put in this House or in relation to issues raised in another place. For example, Lord Northbourne asked the Minister in the other place
	whether the companies, if they are to be limited by guarantee, will be supervised by the Charity Commissioners.
	We have not had an answer to that question because, as far as I can see, the Minister in the other place did not reply to it.
	The question of whether the local education authority would be a fall guy if things went badly wrong was raised in the same debate. The Minister in the other place again did not answer that question except by reference to the simple statement that the Government keep on making. She said:
	It is important to understand that the Government do not seek to do anything that would force anyone to set up a company.
	The bottom line is not whether anyone is forced to do that, but whether the powers are available. Presumably the Government intend that those powers will be implemented. If they are implemented, will the Minister be good enough to explain what will happen and on what scale? Is it intendedI would like him to give a straight answerthat companies at large would be created under the Bill's provisions? Is it intended to use the powers to deal with a problem that the Government believe already exists in education, or have they been introduced simply because the Government think that they might be a good idea but are not prepared to issue the guidelines or code of practice to ensure that they are implemented?
	The debate has gone on between the two Houses for a long time and it has raised questions that the Government are not prepared to answer. That has been the prevailing characteristic of our debates from beginning to end. The Minister says that there is no hidden agenda, but he does not attempt to answer the questions. He hides behind provisions that are so wide that my noble Friend Lord Kingsland referred to the Government view in his concluding remarks to the debate in the other place. Referring to Baroness Ashton, he said:
	What the noble Baroness thinks Clause 10(1) does and what it does are two entirely different things.[Official Report, House of Lords, 23 July 2002; Vol. 638, c. 23036.]
	He is completely right. Clause 10(1) states:
	The governing body of a maintained school may form . . . companies . . . (a) to provide services or facilities for any schools . . . (b) to exercise relevant local education authority functions.
	As my noble Friend said, it is clear from the Bill that services can be provided because relevant education authority functions are teaching services. Indeed, there is no limit to the extent to which that can be done.
	The plain fact is that the Government are not prepared to answer our questions or to explain the Bill properly. That is why we will persist in opposing these provisions. They are not in the interests of schools, governing bodies, teachers or children. They are our first priority. There may be something to be said for giving more freedom, but the manner in which that is being done, the mechanism that is being employed and the complete void that is left in the absence of the Government providing clear answers ensures our continued opposition to these provisions.

Phil Willis: I am grateful to the hon. Member for Stone (Mr. Cash). He should abandon his European campaign and work full time on these issues. As ever, he made an incredibly valuable contribution. I shall not go over the issues that he raised, particularly that of liability, in respect of which we have still not had a satisfactory answer.
	The Minister says that this is ultimately a matter of trust. Lord Dearing referred to that point in the debate in the other place yesterday. I accept that it is a question of whether we trust the Government, but the Liberal Democrats do not, simply because far too many questions remain unanswered.
	I wish to raise the issue of individuals taking out profita subject on which the Minister would not allow me to intervene. He cannot have it both ways. In Committee, the Minister then responsible for the Billnow the Minister for E-Commerce and Competitivenessmade it clear that it was possible for the individuals who had put capital into the company to take out profit. That is in direct contradiction to what the Minister has said in this debate. The Government cannot have it both ways. Such contradictions are totally unacceptable.
	The Minister says that there is nothing new about thisthat schools have been involved in such activities for as long as he can remember. I can remember a little further back than he can, and he is right. One has to ask why we need this huge sledgehammer to crack a relatively small nut. For example, charitable status is not covered anywhere in the Bill. Why is it possible for some of the largest independent schools in the country to be run on the basis of charitable status when it is not possible for a small company set up by a school or a group of schools to do the same?
	As regards the governing body, Baroness Ashton of Upholland endeavoured to be helpful in another place yesterday, and genuinely tried to answer the questions, but in so doing she created more confusion. As the Minister said today, the governing body plays an important role. The hon. Member for Stone is rightclause 2 cannot disregard all educational legislation. I presume that would include provisions in the School Standards and Framework Act 1998, which sets up the current basis of governing bodies and, indeed, the provisions in the Bill that supersede them. The Minister should look at what has happened in Guildford in the case of King's college and 3E's Enterprises. That involves a private company running King's college with the responsibility of putting a majority of its people on to the governing body. Irrespective of whether we agree with that, that is the reality. The Government want to set up more academies that will be semi-independent schools with their own boards of governors, which can be run by a company, and the company can put its own shareholders on to that governing body. That is a huge contradiction with what the Minister said today.
	On teaching, Baroness Ashton said yesterday:
	My Lords, the governing body could not bring in wholesale teaching.[Official Report, House of Lords, 23 July 2002; Vol. 638, c. 234.]
	But it can. There is nothing to prevent a school from saying to a teacher agency such as Select, We want you to provide all the teachers for our school. So it was frankly dishonest to say that a company cannot do that. That is why we do not trust the Ministerwe are not getting the right answers. [Interruption.] Well, perhaps it is that we cannot get the answers that we want.

Graham Brady: Before the hon. Gentleman moves on, the now famous written answer that I received today suggests that the Government are trying to hide behind a very precise interpretation or legalistic use of words. It says that
	the conduct of a maintained school must be under the direction of a school's governing body.
	It is perfectly possible under the direction of a governing body for the services of the schoolthe provision of education in the schoolto be provided by a company.

Phil Willis: With respect to the hon. Gentleman, that is exactly the point that we have been making for the past three and half months. The Government seem unable to grasp that simple point. Whether it is right or wrong, we simply want them to accept that it is the reality. We can debate the merits of it until the cows come home.
	When we debated the amendments last Monday, we talked about a backstop and the responsibilities and duties of the local education authority. The Minister said categorically that if the LEA did not agree to one of these companies being set up, it would not be set up. I was reassured by that until I read page 9 of the guidance to the Lords, regarding clause 11. It says:
	Regulations will set out the basis on which an LEA may refuse consent.
	In other words, the Government are going to introduce a set of regulations that will tell local authorities the grounds on which they can grant or deny a company permission. But clause 11 contains nothing relating to regulations being introduced afterwards. That is an example of the double standards to which we are referring. Whatever the rights and wrongs of these clausesor at least the one we are debatingwe have received unsatisfactory and conflicting explanations from the Minister, the former Minister, the hon. Member for East Ham (Mr. Timms), and the noble Baroness in another place. That has created confusion around what was perhaps a noble objective. It is now ignoble, and I hope that it will be resoundingly defeated in this House and in another place.

David Miliband: The debate has been wide ranging, as always with debates about school companies. On the one hand the hon. Member for Stone (Mr. Cash) says that we have not covered any of the issues that he has raised, but on the other he wants to claim credit for all the improvements that have appeared in the Bill. Meanwhile, the hon. Member for Harrogate and Knaresborough (Mr. Willis) gives us great credit for our attempts to cover the issues that have been raised, but believes that we have made the situation worse with every such attempt. I hope that that does not suggest that the new entente between the two Opposition parties is breaking down. Perhaps they are simply attacking from different points of view.

William Cash: It is called a pincer movement.

David Miliband: I hope that the hon. Gentleman is not going to engage me in a Gramscian endeavour concerning the difference between a war of position and a war of manoeuvre. Perhaps we can do that on another occasion.
	In the course of the debates in this House it has been argued that although there is no objection in principle to schools having the freedom to set up companies, there are risks attachedthat although schools may well make creative use of the freedom that we are giving them, they may make mistakes. On that basis, it is argued that schools should not be given the power in the first place. We believe that that is wrong. If we want innovation in our education system, we must give schools the freedom to make their own decisions about the best ways to raise standards, build partnerships and share their strengths with others.
	I shall address yet again some of the issues that have been raised. A new element that has been put into the debate concerns the now notorious figure of Ms Gaby Hinsliff, who is traded across the Dispatch Box in a way that she has not had the privilege of enjoying before. I am pleased to say that her story in Sunday's edition of The Observer has absolutely nothing to do with our proposals to allow schools to set up companies. As my hon. Friend Baroness Ashton said yesterday, the proposals will not allow schools to contract out their responsibilities for the conduct of the school to a company of any sort. In fact, the article was about the announcement of the Government's strategy on social enterprisean extremely worthy and important development. I am pleased that the official Opposition are embracing the third sector, as it is known. The two initiatives that were outlined yesterday were a Bank of England review of finance for social enterprises and a new social enterprise accreditation scheme. Far from it being a secret plan, it was launched yesterday.
	I shall try to tackle some of the serious points that have been made. The hon. Member for Stone referred again to clause 2. The first point to make, which has been accepted on both sides of the House, is that clause 2 does not provide a blanket power to exempt schools from legislation for any purpose. It is important that hon. Members understand that it applies only to projects that raise standards. It is inconceivable that standards could be raised by voiding the responsibility of governing bodies.
	In Committee, the Opposition's criticism was not that the clause is too wide ranging but that the power to decide whether exemptions should be granted, which will be held by the Secretary of State, advised by Ofsted, is part of a centralising tendency. In fact, a backstop is built in.

William Cash: The Minister refers to the question of whether projects will raise educational standards. Under clause 1, that is determined by
	the opinion of the Secretary of State,
	but the question of whether schools companies will raise educational standards is implicit in the arguments that the Minister has been putting forward from the beginning. The two things obviously run together, and the hon. Gentleman is trying to pick and choose between different expressions in an attempt to get himself off a very difficult hook.

David Miliband: I can assure the hon. Gentleman that I am not trying to pick and choose, as he puts it. Last week, we discussed the LEAs' role in deciding whether the plans for a school company should go ahead.
	We have a second safeguard in clause 2, which is that the Secretary of State, advised by Ofsted, will be in a position to decide whether the proposed scheme will raise standards. Last week, hon. Members asked whether failing schools should be able to foist their failure on other schools, and I was able to provide reassurance. I have explained why clause 2 will not have the disastrous consequences to which the hon. Member for Stone referred.
	I turn now to several points about liability which I was busy scribbling down as the hon. Gentleman spoke. If a company gets into significant debt, the supervising authority, which in most cases will be the LEA, will know about it through its receipt and assessment of the company's accounts. The supervising authority will then notify the school members and the LEAs of the member schools that, in its view, the school company had not properly managed its debt position.
	It will be difficult for a company to get into debt through borrowing, which was also mentioned, and to be unable to repay its debts out of future income. We are building into the regulations a requirement for the company to seek the supervising authority's permission before it can borrow.
	The hon. Gentleman also asked what will happen if a company goes bust. If a company becomes insolvent, its staff are likely to be laid off and its assets sold. However, there will be no risk to the school's assets or to the employment of staff at member schools, as the company does not own the member schools' assets or employ their staff.
	Two hon. Members asked about profits. We believe that it is wrong that only private sector companies should be able to sell services to schools, and it is beneficial if other schools are able to do so. Where a company consists only of members that are education institutions, all its profits will be used for education purposes. Hon. Members asked whether a personfor example, a head teachercould take a stake in a company and make a profit for himself. The answer is no, regulations will prevent that.
	The hon. Member for Stone asked about the regulations proscribing what he called disreputable persons from participating in school companies, but we have not changed our plans on thatsuch proscription was the intention from the start.
	The Charity Commissioners were mentioned, but they have absolutely nothing to do with these issues. They have no involvement in schools because most schools are not charities. It is worth adding, in parentheses, that schools would end up paying 20 per cent. of their rates if they were deemed to be a charity, so it is just as well they are not.
	As a new Member of the House, I rather expected that at this stage of the proceedings we would be debating some important clash of principle between this House and the other place and that we would be fundamentally at odds over what we are trying to achieve. Instead, we are debating issues of detail which we have been over many times, and Ministers have provided answers many times.
	If the House believes, as I do, that our best schools have remarkable expertise that deserves to be widely shared, it will support the concept of school companies. Companies will provide a means for our best schools to support and advise others in their areas of particular strength. We should not allow that potential to be lost. It simply does not make sense to argue that this idea has the potential to do good in a range of circumstances, but because it is conceivable, to use the hon. Gentleman's words, that there are circumstances in which it will not work, we should not allow it to be put into practice.
	The House should decisively reject the Lords amendment. On this side of the House, we support innovation, more freedom for schools and decentralisation. We support the light touch bureaucracy that the official Opposition often claim to support but do not like when we put it into practice. They are stuck in what can only be described as rejection mode. They reject without principle; they reject without reason; they reject simply for the sake of rejection. They are so busy saying no that they even say no to ideas that they claim to support.
	I remember that a right hon. Lady once stood here and said No, no, no. She may not be here, but her legacy lives on in the official Opposition, who insist on saying No, no, no. On this side of the House we say yes, and I urge the House to support the Government.

Question put, That this House insists on its disagreement to Lords amendment No. 12 but proposes amendment (a) to the words restored to the Bill by that disagreement:
	The House divided: Ayes 260, Noes 160.

Question accordingly agreed to.
	It being more than one hour after commencement of proceedings, pursuant to Order [15 July], Mr. Deputy Speaker proceeded to put the Questions necessary to dispose of business.
	Amendment (b) to the words restored to the Bill by motion to disagree to Lords amendment No. 12 agreed to.
	Amendments (a) to (f) to the words restored to the Bill by motion to disagree to Lords amendment No. 13 agreed to.
	Lords amendment in lieua new clause
	Page 23, line 44, at end insert the following new Clause
	Control of regulation (No. 2)
	(1) In considering whether to issue any guidance or other circular to the governing bodies or head teachers of maintained schools in the exercise of functions relating to education, the Secretary of State and the National Assembly for Wales shall have regard to
	(a) the desirability of providing information about good educational practice, while recognising the professional expertise of teachers,
	(b) the benefits that are expected to result from the issue of the guidance or other circular, and
	(c) the desirability of avoiding
	(i) the sending of excessive material to governing bodies or head teachers, and
	(ii) the imposition of excessive administrative burdens on governing bodies or head teachers.
	(2) In pursuance of the duty in subsection (1) the Secretary of State shall in respect of each academic year
	(a) prepare a report listing
	(i) documents sent by him during the year to all governing bodies of maintained schools in England or to all head teachers of such schools,
	(ii) documents (not falling within sub-paragraph (i)) sent by him during the year to all governing bodies of maintained schools in England of a particular kind or to all head teachers of such schools of a particular kind, and
	(b) lay a copy of the report before each House of Parliament, and include within it comparative statistics in respect of each of the two preceding academic years on documents falling within this subsection sent out by him.
	(3) In pursuit of the duty in subsection (1) the National Assembly for Wales shall in respect of each academic year prepare and publish a report listing
	(a) documents sent by the Assembly during the year to all governing bodies of maintained schools in Wales or to all head teachers of such schools,
	(b) documents (not falling within paragraph (a)) sent by the Assembly during the year to all governing bodies of maintained schools in Wales of a particular kind or to all head teachers of such schools of a particular kind.
	(4) The documents referred to in subsections (2) and (3) do not include any document sent by the Secretary of State or the National Assembly for Wales
	(a) otherwise than in the exercise of functions relating to education, or
	(b) at the request of the person to whom it is sent.
	(5) Each document issued by the Secretary of State or the National Assembly for Wales and falling within subsection (2)(a)(i) or (ii) or (3)(a) or (b) shall list within it previous relevant documents issued by the Secretary of State or the National Assembly for Wales and shall state clearly those documents which are superseded by the current document.
	(6) Each document issued by the Secretary of State or the National Assembly for Wales and falling within subsection (2)(a)(i) or (ii) or (3)(a) or (b) shall state clearly the persons for whom any advice and guidance is intended.
	(7) In this section academic year means a period beginning with 1st August and ending with the next 31st July.
	Motion made and Question put, That this House agrees with the Lords in the said amendment in lieu:
	The House divided: Ayes 249, Noes 154.

Question accordingly agreed to.

DEFERRED DIVISION

Mr. Deputy Speaker: Order. I have now to announce the result of the Division deferred from a previous day.
	On the Question on the business of the House, the Ayes were 13, the Noes were 289, so the Question was negatived.
	[The Division Lists are published at the end of today's debates.]

Eric Forth: On a point of order, Mr. Deputy Speaker. I am sure that you can confirm that the deferred Division whose result you have just announced, whereby the Question was negatived by a very large majority, was on a Question that referred to business conducted on Monday 22 July; therefore, we were voting today on the nature of the business that took place two days ago. I think that that is an accurate account. Is that not the ultimate absurdity and does it not bring the House into disrepute?
	Is it not also the case that, although the motion was in the name of the Leader of the House, it was negatived, I am told, at the behest of the Government Whips? Has not the Leader of the House been undermined by his own Whips for the second time in only a few weeks or months, and do we not therefore face a crisis in the House of Commons? The Leader of the House is being systematically undermined by his Whips and his parliamentary colleagues.
	Mr. Deputy Speaker, the more important question is, can you now refer the matter of deferred Divisions to the Procedure Committee? Surely you, as a staunch defender of the House, its procedures and its rights, cannot accept either the position in which we find ourselvesthat of voting today on a matter that was dealt with two days agoor that the Leader of the House has been put in a position of such embarrassment. This situation must be of as much concern to you as it is to my colleagues and me, and I hope that you can assure us that something will be done about it.

Mr. Deputy Speaker: Today's circumstances might demonstrate that there is a problem with the House's present rules on deferred Divisions. The Sessional Order resolved on 28 June 2001 requires the Speaker to defer a Division if his decision is challenged after 10 o'clock, or after 7 o'clock on a Thursday. The deferred Division must then take place on the next Wednesday on which the House sits. That is what happened today in conformity with the House's rules. The Speaker has no power under those rules to cancel a deferred Division. It is up to any right hon. or hon. Member to refer to the Procedure Committee any matter which it is thought deserves careful consideration.
	As for whether the ultimate absurdity has been reached, I think that we will have to serve many more years in the House before that happens.

Eric Forth: Further to that point of order, Mr. Deputy Speaker. I am most grateful for your response, and I am certainly prepared to rise to the highly acceptable challenge that you have laid down. However, may I press you a little further? Can you say whether Mr. Speaker or you, as Chairman of Ways and Means, are sufficiently concerned about the issuegiven the difficult position in which, I fear, you and Mr. Speaker have been placed by itto give the House or me a little encouragement to refer the matter to the Procedure Committee?

Mr. Deputy Speaker: It is not for the Chair to encourage or discourage any Member of Parliament to raise a matter with the Procedure Committee. Right hon. and hon. Members have sufficient wit and savvy to know when it is proper to take up a matter in that way, and I am sure that it will be done. What has happened is instructive and it will, no doubt, be noted by members of the Procedure Committee.

Export Control Bill

Lords Amendments in lieu of an Amendment to which the Commons have disagreed, considered.

New Clause

Lords amendment: No. 10B, in lieu of Lords amendment No. 10, to which the Commons have disagreed, after clause 6, to insert the following new clauseProtection of certain freedoms
	(1) The Secretary of State may not make a control order which has the effect of prohibiting or regulating any of the following activities
	(a) the communication of information in the ordinary course of scientific research,
	(b) the making of information generally available to the public, or
	(c) the communication of information that is generally available to the public,
	unless the interference by the order in the freedom to carry on the activity in question is necessary (and no more than is necessary).
	(2) The question whether any such interference is necessary shall be determined by the Secretary of State by reference to the circumstances prevailing at the time the order is made and having considered the reasons for seeking to control the activity in question and the need to respect the freedom to carry on that activity.

Nigel Griffiths: I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this it will be convenient to take Lords amendment No. 10C and the Government motion to agree thereto.

Nigel Griffiths: Hon. Members will recall that on 24 June, the House disagreed with a number of Lords amendments that aimed to provide protection for academic freedoms, but would, in fact, have opened several extremely damaging loopholes in the Bill. At the same time, the Government introduced in the other place a clause that was designed to provide explicit protections for certain freedoms which are of particular concern to the academic community. However, the Opposition considered that the clause did not go far enough to protect those freedoms.
	In spite of those differences, it was clear that all concernedthe Government, the Opposition and the universities' representative bodiesshared essentially the same aim: to find a way to provide protections that would prevent a future Government using the powers in the Bill in ways that could damage freedoms that are important to the academic community and others, and at the same time ensuring that the Bill provides the Government with the powers they need for an effective export control regime. Necessarily, any such solution should not contain loopholes that could be exploited by the unscrupulous.
	Discussions were held with the Opposition parties and Universities UK to see whether we could reach agreement on the text of a revised clause that all were content would protect the freedoms about which concern had been expressed, while avoiding the creation of loopholes in the Bill. I am pleased to say that we were able to obtain agreement, and the amendment proposed in the Lords message reflects that agreement.
	The revised clause that the amendment would insert deals with two of the concerns that the hon. Member for Salisbury (Mr. Key) expressed about the clause it would replace. The first was the issue of interchanges of unpublished research between academics. The new clause, in subsection (1)(a), introduces a reference to a new activity to be protected by the clause, namely
	the communication of information in the ordinary course of scientific research.
	That is in addition to the activities of publishing information or communicating published information. The House will have noted that the clause included in the message from the other place applies to all those engaged in scientific research. Thus it meets one of the Government's criticisms of the Opposition's new clause with which this House disagreed on 24 June.
	The second concern voiced by the hon. Member for Salisbury was that the previous clause required the Secretary of State to consider only the matter of academic freedom, and no more. While the Government did not accept that that was a fair description of the clause's effect, we did accept that there was scope to strengthen the requirements placed on the Secretary of State. The revised clause therefore states that it is for the Secretary of State to determine whether interference in any of the freedoms described by the clause is necessary in the light of
	the circumstances prevailing at the time . . . and having considered the reasons for seeking to control the activity in question and the need to respect the freedom to carry on that activity.
	That formulation in the clause makes it explicit that the Secretary of State must form his or her view of the need for the interference in the light of all the relevant facts and other surrounding circumstances. Those will include international obligations and commitments undertaken by the United Kingdom. It also makes explicit the balancing exercise that must be carried out by reference to those circumstances and the need to control the activity and to respect the freedom to carry on that activity. This means that the Secretary of State will have to identify the ways in which particular proposed controls are likely to impinge on the freedom to communicate in the ways that are specified in subsection (1), and the reasons for that interference. He or she will then have to decide whether that control is necessary.
	These procedures will require the Secretary of State to consider the proportionality of the proposed controls to be able to conclude that the degree of interference is no more than is necessary to meet the identified reasons. This places a stronger duty on the Secretary of State in terms of the requirements on him or her to ensure that the freedoms described in the clause are not interfered with except for good reason and, where necessary, when drawing up control orders. Therefore, the procedures give the court more ability to strike down unacceptable provisions in a control order than does the clause that is being replaced.
	At the same time, the proposed clause avoids creating the sort of loopholes in the Bill that the Opposition amendments would have created and with which the House disagreed on 24 June. I am pleased to say that, in the light of the agreement reached with the Opposition and Universities UK on the revised clause, the Lords have not insisted on their amendments with which the House disagreed. I therefore invite the House to agree to both amendments as proposed by the Lords in lieu of Lords amendment No. 10, to which the Commons have disagreed.

Robert Key: The Opposition wish to agree with the Lords and with the Minister. We are delighted by the outcome of sensible negotiations, which have demonstrated that Parliament can work in both Houses when it tries. I think that the outcome has been widely welcomed by the academic community. For the reasons that the Minister has explained, we think that academic freedom will now be guaranteedas far as these things can be guaranteed. That is because a Secretary of State could no longer make arbitrary decisions that could not be challenged in the courts. We warmly welcome that.
	These matters have been through the determination of many Members in both Houses. When my noble Friend Lady Miller of Hendon introduced her amendment in the other place, which was designed to protect and preserve academic freedom, she was supported by Cross Benchers and by Lady Sharp of Guildford for the Liberal Democrats. In its present form, the amendment is accepted by Universities UK, which represents the vice-chancellors, by Lady Warwick of Undercliffe, who has worked hard on these matters, and by the Association of University Teachers. We are glad to come to such a happy conclusion.
	I must pay particular tribute to my noble Friend Lady Miller. I record my gratitude to Lord May of Oxford, the distinguished president of the Royal Society, who has similarly worked extremely hard on these matters. I pay tribute also to the Information Policy Research Foundation and to Dr. Ross Anderson of Cambridge university, as well as to Mr. Nicholas Bowen, who is a solicitor. He is a member of the electronic law committee of the Law Society. Similarly, I pay tribute to others who wish to remain anonymous. I record my gratitude to Professor David Vincent, the deputy vice-chancellor of Keele university, whose common sense has illuminated the argument.
	A happy conclusion has been reached, and the Opposition are happy to speed the Bill on its way. We are grateful to the Government for seeing sense and coming to a happy conclusion.

Alan Howarth: Happily, this is not the occasion for a substantial speech. I want to express my gratitude to the Government, and in particular to the Minister responsible for science, for heeding the legitimate concerns that were expressed by Universities UK and by more and more in the academic world as they became aware of the possible consequences of the legislation as previously drafted in terms of jeopardising academic freedom.
	Those of us who raised concerns during parliamentary consideration of the BillI speak for myself, but I imagine that this applies to us allhad no desire to frustrate the Government in their effort, vital in every sense of the word, to prevent the proliferation of weapons of mass destruction. I recognise that my right hon. and hon. Friends in the Government had no malign or, as the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths), has just put it, unscrupulous intentions towards academic freedom. However, it is always a prudent principle for Parliament not to confer on Governments unfettered powers that maymuch more often as a result of a fit of absence of mind than of any deliberate intentionbe abused.
	After all, Departments are focused on their particular departmental preoccupations. Other Departments do not like to interfere with them, and perhaps do not even notice the consequences of the policies of a neighbouring Department until it is too late, when some damage has been done. Academic freedom is fragile, and in the past Whitehall has from time to time been a little crude, even cavalier, in its attitude to academic freedom. However, academic freedom is crucial to a liberal society and to the advancement of knowledge.
	It is therefore to the Government's credit that they have listened and recognised that there was a legitimate problem. They took it seriously and acted on it. They have revised the proposed legislation to strike a balance that we can regard as satisfactory between those imperatives that were liable to be in tension, the Government's desire to protect our lives and our security, and the fundamentally important need to preserve academic freedom.
	We should acknowledge that the main debates on this issue occurred in the other place. The other place is yet not much reformed, but on this occasion at least, and from time to time on other occasions, it has been more vigilant for our freedoms than we have been in this place. I conclude by noting that it is important that further reforms of the other place do not impair its capacity to exercise that vigilance, by strengthening the grip of the party machines, for example.

Vincent Cable: I endorse the spirit of the remarks of the hon. Member for Salisbury (Mr. Key) and those of the right hon. Member for Newport, East (Alan Howarth). I appreciate that the Government have listened and that we now have an improved piece of legislation. The amendment that has been agreed to is a model of brevity and clarity compared with what went before.
	We must praise the effort that has been made in the past few weeks. As the hon. Member for Salisbury acknowledged, the campaign was a cross-party effort. I acknowledge the role that Lady Sharp of Guildford played from the Liberal Democrat Benches in another place. She fought for academic freedom and then helped to forge a compromise with the universities and the Government.
	It has always been our view on the Liberal Democrat Benches that, in this instance, academic freedom had to be qualified. There had to be some qualification because military technology transmits itself through ideas as much as through hardware. I recall one of my distinguished academic constituentshe was engaged in material sciencetelling me about the evening when he lost his innocence in that field when working late at night. He went to the laboratories and saw one of his Iraqi PhD students making off with key documents from the department. That is the sort of practice that the proposed legislation is designed to guard against.
	One of the positive outcomes of the exercise is that we shall see the passage of the Bill into law. We welcome that. It is half a loaf, or even a third of a loaf, rather than a whole loaf, but it is welcome none the less. We regret that the Minister did not listen to our suggestions on sustainable development, on brokerage and on parliamentary scrutiny. However, we welcome the overall thrust of the Bill. We also welcome the compromises that have been reached on academic freedom.

Nigel Griffiths: I am pleased that we are all agreed that the text provides proper protection for important freedoms while avoiding the creation of loopholes. I think that Members on both sides of the House agree that the Bill is to be welcomed, because it provides powers that are needed for a more effective and comprehensive export regime, while at the same time providing for greater accountability to Parliament for the use of the powers contained within it, as Lord Scott of Foscote recommended.
	I look forward to the Bill receiving Royal Assent shortly. This is landmark legislation and I am grateful to all Members, Peers and others who have a strong interest in these matters. I am proud of what we are achieving, and I urge the House to agree to the Lords amendments.
	Lords amendment agreed to.
	Subsequent Lords amendment agreed to.

Norman Baker: On a point of order, Mr. Deputy Speaker. A parliamentary written question from the hon. Member for Birmingham, Hall Green (Mr. McCabe) was answered today. It relates to the record of ministerial travel over the past 12 months. Some of us believe that such questions should have been answered throughout the parliamentary Session, but in any case they have all been collated for today, the last day that Parliament is sitting before the recess.
	The answer is thin, and the detail is contained in a document which, we are led to believe, is in the House of Commons Library. Ten minutes ago I went to the Library again, and staff there confirm that no such document has been received, some four hours after the original parliamentary question was answered. Indeed, the Library staff are in some doubt as to whether the document will be received today, which leaves open the prospect that the House will be in recess when the detail becomes available to hon. Members, although I understand that, in typical style, the media have copies of the document.
	Is it not an affront to Parliament first, that the questions are not answered regularly throughout the Session, and secondly, that the information that which is now available, apparently, is not in the Library, contrary to the implication of the parliamentary answer given today, and may not be there until the House is in recess? Surely it is not beyond the wit of the authorities to ensure that documents are sent on timeelectronically, perhaps.

Mr. Deputy Speaker: I am grateful to the hon. Gentleman for giving me notice that he would raise this matter and put it on the record. Obviously, the Chair has no responsibility for the wider issue that he raises about the way in which parliamentary questions are answered. I refer to what Mr. Speaker has said on a number of occasions, and his hopes that Members' questions will be answered as promptly as possible. If the hon. Gentleman is correct about the sequence of events today, there would certainly appear to have been a slip-up, which is a serious one. As the matter has been raised, Government Front-Bench Members will have notice of it. I hope that the omission can be put right as quickly as possible.

Proceeds of Crime Bill

Lords Amendments in lieu of certain Amendments to which the Commons have disagreed, considered.
	Lords amendment: No. 4B, in lieu of Lords amendment No. 4, to which the Commons have disagreed, in clause 75, page 48, line 4, at end insert
	(3A) But an offence does not satisfy the test in subsection (2)(d) or (e) unless the defendant obtains relevant benefit of not less than 5000.
	(3B) Relevant benefit for the purposes of subsection (2)(d) is
	(a) benefit from conduct which constitutes the offence;
	(b) benefit from any other conduct which forms part of the course of criminal activity and which constitutes an offence of which the defendant has been convicted;
	(c) benefit from conduct which constitutes an offence which has been or will be taken into consideration by the court in sentencing the defendant for an offence mentioned in paragraph (a) or (b).
	(3C) Relevant benefit for the purposes of subsection (2)(e) is
	(a) benefit from conduct which constitutes the offence;
	(b) benefit from conduct which constitutes an offence which has been or will be taken into consideration by the court in sentencing the defendant for the offence mentioned in paragraph (a).
	(3D) The Secretary of State may by order vary the amount for the time being specified in subsection (3A).

Bob Ainsworth: I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this it will be convenient to take the following Lords amendments: No. 4C, in clause 341, page 200, line 3.
	No. 4D, in clause 348, page 203, line 18.
	No. 4F, in clause 353, page 206, line 41.
	No. 4G, in clause 360, page 211, line 19.
	No. 4H, in clause 366, page 213, line 44.
	No. 4J, in clause 451, page 260, line 25.
	No. 4K, in page 260, line 36.
	No. 43, in clause 94, page 56, line 7.
	No. 43B in clause 145, page 89, line 23.
	No. 43C, in clause 375, page 218, line 6.
	No. 43D, in clause 382, page 221, line 3.
	No. 43E, in page 221, line 17.
	No. 43F, in clause 386, page 223, line 35.
	No. 43G, in clause 393, page 227, line 47.
	No. 43H, in clause 399, page 230, line 21.
	No. 43J, in clause 451, page 260, line 32.
	No. 43K, in page 260, line 39.
	No. 73, in clause 161, page 96, line 13.
	No. 73B, in clause 229, page 140, line 4.
	No. 73C, in clause 451, page 260, line 25.
	No. 73D, in page 260, line 36.

Bob Ainsworth: I think that we are all agreed that one of the requirements for the granting of the investigatory powers and warrants in part 8 should be that it is in the public interest for the court to grant the order or warrant. When the Bill was introduced, the Government took the view that it was not necessary to replicate in the Bill the provisions in the previous legislation. That was because the Human Rights Act 1998 requires a judge to comply with all the safeguards that are provided by the European convention on human rights, and the Government were satisfied that that would cover the consideration of whether the granting of an investigatory power was in the public interest.
	We recognise, however, that there have been continuing concerns, and we therefore decided to introduce an amendment in the other place to make it explicit in the Bill that the public interest test must be an integral part of the court's consideration. Lords amendments Nos. 4C to 4H and 43C to 43H do precisely that.
	On Lords amendments in lieu Nos. 4B to 4K, 43B to 43K and 73B to 73D, last Thursday we discussed mandatory as opposed to discretionary confiscation. We cannot agree with the Opposition on that matter. We are determined that the confiscation system remain mandatory, and that we do not go backwards in that regard. The criminal lifestyle tests set out in parts 2 to 4 in theory expose a defendant to the criminal lifestyle regime where that defendant is convicted only of a trivial offence or offences that are not inherently indicative of a criminal lifestyle.
	It would be possible for the court to apply assumptions where an offender is convicted of one acquisitive summary offence of any description that lasts for more than six months, or four summary offences of any description, from which only a very small amount of benefit had been derived. The same would be true where an offender was convicted of one offence of any description, from which he had benefited, and had two past convictions of any acquisitive offence. The benefit might be trivial, but a criminal lifestyle confiscation order could still be made.
	In practice, the director or the prosecutor would never mount a confiscation proceeding in such an inappropriate case. There is a presentational issue here, however. We have reached the conclusion that it would be better for the Bill to impose a formal threshold before the criminal lifestyle tests can be applied. That will make it clear in the Bill that the authorities will not be able to apply for confiscation orders in trivial cases against offenders who are not convicted of offences specified in the criminal lifestyle schedules.
	That is why we tabled these further amendments in lieu in the Lords. They aim to address concerns about the breadth of some of the criminal lifestyle tests, yet they preserve the integrity of confiscation as a mandatory procedure. We are making absolutely no change to the criminal lifestyle regime as it will apply to anybody convicted of one of the scheduled offences. There will be no financial threshold in such cases. But in relation to the other criminal lifestyle definitions, we are content to see a financial threshold imposed.
	What we are saying is that for the criminal lifestyle tests to be satisfied, the total benefit from the triggering offences and any other offences taken into account for sentencing purposes will have to be 5,000 or more. The amendments introduce a power for the Secretary of State to change the 5,000 threshold by order. This power will be used, both to take account of inflation, and to respond to different patterns and trends of offending. It will be subject to the affirmative resolution procedure.
	I invite the House to agree with their Lordships in their amendments in lieu.

Dominic Grieve: It is with some pleasure that I welcome the amendments that were tabled in the Lords in lieu of their previous amendments, and which the Government are willing to accept as Government amendments.
	There is a long history to the matter. On a number of occasions in Committee we expressed concern about the threshold by which people went into the confiscatory regime and were deemed to have a criminal lifestyle. I must say to the Minister, and it would be wise for me to put it on the record, that there is a certain irony in the way in which the Government have finally seen fit to approach the matter. It lacks the flexibility of the judicial discretion route which, as the Minister knows, we preferred.
	For instance, if the prosecutor and the Assets Recovery Agency took the view that an individual had committed a number of very minor offences but was nevertheless known to be a serious criminal, under the earlier amendments they might still have been able to initiate the confiscation regimethe Al Capone clause, as it has sometimes been called.
	In this case, the Government have refused to go down that road, because they did not want judicial discretion. They have fettered the mandatory provisions in a minor way. In the circumstances that I have just described, the person would be able to escape the confiscatory regime. I accept that, as a matter of principle, it could be argued that that is the appropriate way to proceed, as in those circumstances he would not be deemed to have a criminal lifestyle.
	Nevertheless, I entirely welcome what the Government have done in respect of the 5,000 threshold. They are absolutely right that that should not cover the schedule offencesthat would go a long way to defeating the Bill. The Government have taken the appropriate course of action. In respect of the other offences, this measure finally lays to rest that much-debated subject of the person who has three convictions for not having a rear light on his vehicle in the previous three-year period. That could be construed to be an offence for gainindeed, it would be because it would save them the cost of replacing the light bulband so would expose them to a parallel world in which they had to run the risk of having their assets confiscated, having been deemed to have a criminal lifestyle. To avoid confiscation, they would have the onerous burden placed on them of having to prove that they did not have a criminal lifestyle and having to show where their assets came from.
	I welcome this measure. Of all the concessions that have been gently wrested from the Government during the passage of the Bill, this is the most significant. I am delighted that the Government have finally seen sense on this issue. As the Minister knows, we share with him the desire that this legislation should work. It will work only if it commands widespread public approval and is seen to be fair. This is a major step in that direction, and I am grateful to the Minister that, in the light of what happened in the Lords and the serious reservations that were expressed, he has seen fit to introduce this amendment.
	Before we move on to the other matter that falls to be considered[Interruption.] I did not think that the Minister went into any great length on the amendment of Lord Lloyd of Berwick. If he intended to cover it in this group, I shall reply to it at the same time.

Bob Ainsworth: I did not comment on that.

Dominic Grieve: I assumed that the Minister had not spoken to that amendment, and that he was going to do so subsequently. If not, I shall deal with it now.

Bob Ainsworth: I shall seek clarification, but I thought that we were going to discuss that amendment separately when we had disposed of this one.

Dominic Grieve: I apologise to the Minister. That is what I had assumed, and that was how I was treating the matter, but I wanted to make sure that I was not failing to take the opportunity to deal with it.
	I shall refer to the other amendments in the group that the Minister has spoken to, which relate to the public interest tests that he introduced in respect of investigatory powers. [Interruption.] Again, the Minister will remember that in Committee we went to great lengths to point out that we did not think that the Human Rights Act 1998 on its own should be relied on. [Interruption.]

Mr. Deputy Speaker: Order. To avoid any further exchanges and confusion, I refer hon. Members to the list of amendments that was published. These two matters are put down separately.

Dominic Grieve: The issue of the public interest test is simple. We think that there should always be a public interest test, and the Human Rights Act should not be used as a fallback position to justify passing legislation that does not include the safeguards that would ordinarily apply. I am extremely grateful to the Minister that, having debated that subject at enormous length in Committee and on other occasions, he has now provided those safeguards. I believe that that greatly improves the Bill. I am delighted that the other place saw fit to introduce that measure through the Government, and that we can accept it.

Norman Baker: I welcome the amendments tabled by the Minister and his colleagues that have been brought back from the House of Lords. It is sensible to have a 5,000 de minimis level. The Minister neglected to mention that that was in amendment No. 280 that was discussed on Tuesday 4 December 2001. If I am not mistaken, it was tabled by my hon. Friend the Member for Mid-Dorset and North Poole (Mrs. Brooke) and me. [Interruption.] The Minister laughs, but the record will show that to be the case.
	On that occasion, when I suggested that 5,000 was not a large figure, he said:
	I am always staggered by the affluence of other hon. Members. The hon. Gentleman has stated that 5,000 is a low figure. If I had obtained 5,000 by committing a crime, I would not consider it to be a low amount.
	I shall not say any more, except that I acknowledge that hon. Members are genuinely attempting to steer the legislation in the right direction. However, I cannot see how we could do that without providing escape routes for serious criminals.[Official Report, Standing Committee B, 4 December 2001; c. 446.]
	Clearly, the Minister has accepted the thrust of my comments on that occasion, although he did not care to mention that in his introductory remarks. Perhaps he was concerned that the Prime Minister would accuse him of wrecking the Proceeds of Crime Bill, as he has accused others who have sought to improve it.
	This is a sensible measure. A de minimis level is the right approach. I shall not wind up the Minister further for fear that he will withdraw the amendment or do something else with it.
	While on de minimis levels, it is a pity that the Minister did not find a way of dealing satisfactorily with the points that we raised the other day on secure creditors. I shall be out of order if I go on about that for too long, Mr. Deputy Speaker, but I would just say that a de minimis provision would meet some of the concerns that Members have expressed. I hope that, even now, the Minister will consider whether that is a practical way to deal with that point.
	The public interest provisions are equally welcome, and it is sensible to introduce them at this stage. Without wishing to be unkind to the Minister, I must say that had the provisions on the 5,000 de minimis level been brought forward earlier, there might not have been the amendments in the House of Lords that have caused him and his colleagues some difficulties. I hope that that shows to the Minister that he should sometimes pay attention to the wisdom that comes from Opposition Members. When he was making his comments about the 5,000 de minimis level, I noticed that his colleagues were nodding sagely as if it were a wonderful proposition. They are the same Members who howled down the proposal when it was made in Committee.
	On that note of agreement, I am happy to support the Government in this group of amendments.

Bob Ainsworth: I welcome hon. Members' comments as far as they go. They are right that this is the most significant amendment that they have achieved, but its significance should not be exaggerated. As I said in my opening remarks, and as was said in CommitteeI cannot remember in what context the hon. Member for Lewes (Norman Baker) raised the 5,000 de minimis issue and I cannot be bothered to checkin practice, confiscation proceedings for offences such as a missing rear light, which was repeatedly mentioned in Committee, would never be used. This measure puts that assurance in the Bill. If Opposition Members want to believe that it does something significant, they are welcome to do so.
	With regard to the public interest, the situation would have been covered by the European convention on human rights. It is now in the Bill. If that makes hon. Members here and in the other place feel more comfortable and able to drop their more significant objections that would have seriously damaged the Bill, I welcome that as well.
	Lords amendment agreed to.
	Subsequent Lords amendments agreed to.

Clause 375
	  
	Making of Order

Lords amendments Nos. 43B, 43C, 43D, 43E, 43F, 43G, 43H, 43J and 43K in lieu of Lords amendment No. 43 to which the Commons have disagreed, agreed to.

Clause 229
	  
	Criminal lifestyle

Lords amendments Nos. 73B to 73D, in lieu of Lords amendment No. 73 to which the Commons have disagreed, agreed to.

Clause 2
	  
	Director's functions: general

Lords amendment: No. 110B, in page 2, line 21, at end insert
	(6) The guidance must indicate that the reduction in crime is in general best secured by means of criminal investigations and criminal proceedings.

Bob Ainsworth: I beg to move, That this House agrees with the Lords in the said amendment.
	The amendment addresses the feeling that the bringing of criminal prosecutions is preferable when normal evidential and public-interest tests have been satisfied. We have always said that prosecution will remain the priority, and that the director of the new agency will pursue civil recovery or use his taxation powers only when prosecution is not appropriate. There has, however, been nothing in the Bill to that effect.
	The amendment will ensure that the guidance given to the director by the Secretary of State under clause 2 will make clear that criminal investigations and criminal prosecutions will in general best secure the reduction of crime. I hope that that will allay any fears that civil recovery might be used in cases in which criminal proceedings should properly be brought.

Dominic Grieve: I welcome the amendment without hesitation. It is clearly a step in the right direction, as it would insert in the Bill a hierarchy of preference, thus providing at least some leverage to ensure that the civil recovery system was not abused in certain circumstances. I am thinking of circumstances in which it might have been open to the prosecution to go down a criminal route but it chose not to do so, for reasons relating not to the quality of evidence but simply to the ease involved in carrying out recovery measures.
	As the Minister will know, what exercised those in the other place and, indeed, those of us who served on the Committee was the enormous problemI think that it is still an enormous problemthat it would be possible to make an allegation of criminality against the person in possession of the money in some if not all cases. If the allegation were proved, that person might face all the opprobrium involved in having committed, or being held to have committed, a serious criminal offence that would result in confiscation or civil recovery of his assets, even if he had not been convicted of any offence. I feel that what has returned from the Government in the Lords is second best.
	Given the way in which the House of Commons handled the matter, the Minister should count himself fortunate that we got anything back from the Lords. If he read the Hansard report of the debate there, he will know that there was amazement and criticism about our success in rejecting the original amendment moved by Lord Lloyd without any debate in this House. I say that to the Minister in all friendliness, as he had no part in thissave, I suppose, for his role as a Minister.
	I must say that I was a little surprised to read that Lord Goldsmith, the Attorney-General in the other place, had said there that a programme motion had been agreed with the Opposition here before the debate took place. It was an agreed programme motion, he said; the Government had not insisted on it or forced it on us. It is true that we did not divide the House. If we had, we would have been fiercely criticised for reducing yet further the time available for us to consider these important amendments.
	I hope that, when he has an opportunity to do so, the Minister will tell his noble Friend about the normal procedure in this House, and about the fierce criticism that he and other Ministersand Whipshave heaped on the Opposition for dividing the House on programme motions. There was no agreement: it was the Government's decision to take the risk of trying to get the business through in the very short time available.
	For that reason, it is especially regrettable that we have exposed ourselves to ridicule during our dealings with this important Bill because of the way in which an extremely serious amendment moved in the other place was treated here. It is lucky for the Minister that the other place, respecting its constitutional duty, decided that in the circumstances it would seek another amendment to which we could agree.
	Let me put this on the record. I understand that such was the anger generated in the other place by the lack of scrutiny, it is rumouredobviously I cannot speak for those in the other placethat if the same thing ever happens again the Lords will reject any amendment to a Lords amendment rejected by this House without debate. That was communicated to me, and the Government may have to heed it if they wish to achieve compromises at the end of the passage of long Bills.
	As I said, I welcome the amendment, although whether it is sufficient only time will tell. Whether Lord Lloyd was right in his original amendmentto which he adhered, but which was defeated when it returned to the Lordswill have to depend on the Judicial Committee of the House of Lords. All I can say is that following the statement on the front of the Billcouched in such redolent termsthat the Home Secretary is satisfied that the Bill complies with the Human Rights Act 1998, he may have to eat humble pie. Indeed, I will go further: given that he was put on notice repeatedly during our debates on the Bill about anxieties in regard to whether it complied with the Act, he might see fit to resign. If I were in his shoes, I would feel that that was the only course open to me.

Ian Lucas: I believe that Lord Lloyd grossly overstated the position. This is the procedure whereby a court will determine whether property is seized on the balance of probabilities. I have dealt with the courts professionally in the past, and that is a determination, and a process, which occurs every day in the civil courts. I have acquired considerable respect for the hon. Gentleman over a long period, but he is over-egging the pudding.

Dominic Grieve: I listened carefully to what the hon. Gentleman said, and I greatly respect him for his contribution during the Bill's passage. He and I, along with a number of Members who are present, have lived with the Bill for a long timeand, I think, will part company with it shortly. I merely say to all who participated that our scrutiny here was, in many ways, a model of its kind. Having said that, I can only refer the hon. Gentleman to what Lord Lloyd said in the other place. He presented an extremely persuasive argument, which ought to make the Government reflect that the legislation as drafted in respect of civil recovery might not comply with the Human Rights Act.
	Lord Lloyd may be wrong. The Government must believe that he is wrong, or they would not have persisted. It is clearly a genuine belief, and I appreciate the Minister's position. Lord Lloyd, however, has a far more considerable legal brain than I haveand, I suspect, a better legal brain than any other Member of the House of Commons. His was not an individual view, but one backed by a number of their lordshipsincluding, I noted, Lord Goldsmith's head of chambers. That may give the Government pause for thought, but the matter will be tested as and when the time comes.
	In the meantimethe other place having deferred to the will of this House, according to constitutional conventionit remains for me only to thank the Minister for his courtesy during the passage of this long Bill, and to wish the legislation well. Time will tell whether the House, by failing to consider carefully what Lord Lloyd had to say, has shot itself in the foot. I hope that I am wrong, but as I have said there is much good in the Bill, and by making this addition we are undoubtedly improving it.

Norman Baker: I can be brief on this amendment as, to a large degree, I echo the points made by the hon. Member for Beaconsfield (Mr. Grieve). The amendment seems reasonably inconsequential. It reiterates a comment that the Minister made on a number of occasions throughout the Committee. I was personally in no doubt that the hierarchy to which he referred was in place. Indeed, I remember asking him about it at an early stage. My personal view, if it is not unconstitutional, is that the House of Lords has been bought off rather cheaply with this amendment. All credit to the Minister if that is what he has achieved. It is welcome so far as it goes but it just confirms what the Minister has already told us.
	We were happy as a party to support Lord Lloyd's amendment in order to keep the ball in the air; there were issues to be considered. Had it come to the final decision, the amendment's impact may have gone too far for us. It may have weakened the legislation in a way that was beyond what was acceptable. However, it raised serious issues. The issue about human rights compliance is a genuine one. Doubtless the Minister has had advice on that from his officials and we will find out in due course whether any action will be taken and whether it will be successful. We wait to see what the outcome is.
	The amendment is welcome so far as it goes. No one could possibly object to it. It is motherhood and apple pie. It is perhaps a nice way to end the Bill. As this is probably the last time that I shall speak on the Bill, I thank the Minister for his contributions and good humour throughout its passage, if not on other occasions. I thank the hon. Member for Beaconsfield and his colleagues for their contributions, too.

Bob Ainsworth: We have been over the substantive issue before. Serious allegations about individuals are regularly made in civil recoverythat point was made by the Attorney-General in another placeso we do not accept Lord Lloyd's amendments, but I hope that this measure helps in the passage of the Bill. Again, I do not think that it is of huge significance, as the hon. Member for Lewes (Norman Baker) said. The Committee was assured that this was the intention, this was the hierarchy and these were the priorities that should be given in relation to the different powers in the Bill. We have now put that in the Bill. That makes it clear.
	On timetabling, I was surprised by the comments of the hon. Member for Beaconsfield (Mr. Grieve) because I think both he and I thought that we had allocated sufficient time to discuss the three Lords amendments. We then had two statements on that day. I think that I am not misrepresenting the position when I say that we both still thought that we had sufficient time. I do not think that anyone filibustered or wasted time last Thursday afternoon, yet we did not manage to get to that third important group of amendments.
	That was not deliberate. I do not think that anyone meant to slight the other place in so doing. It showsI hope that a degree of consensus is possible on this pointthat if timetabling is to work, and I believe that there are great advantages to such procedures, great care and consideration need to be given as to how timetables are structured. In retrospect, if we had broken it down to ensure that the three substantive issues all received a degree of time, perhaps we would not have upset the Lords as we did. I hope that the hon. Gentleman agrees that it was not deliberate. We thought that we had allocated sufficient time, and I think that he did.

Dominic Grieve: rose

Nick Hawkins: rose

Bob Ainsworth: I will give way to either one of the hon. Gentlemen.

Nick Hawkins: Will the Minister understand that while of course there was no deliberate filibustering on the matterwe accept entirely that there was a genuine attempt to debate itone of the things that caused problems on that day, which he can discuss with Government business managers, was the fact that there were two statements that seriously cut into the time? When the original programme motion was discussed we were not anticipating that. I hope that he will take that message back clearly. His point about splitting the matter so that there is separate timetabling for all the important issues is helpful and could be taken forward.

Bob Ainsworth: I acknowledge that point.

Dominic Grieve: I accept that as originally programmed there would have been ample time to debate the matter if there had not been the two statements. Once the two statements came in, we were faced with an impossible choice. I am sure that the Minister accepts that. To vote against the motion when the time came would have been to diminish the amount of time available. One simply had to hope for the best and hope that we could get through it. It was going to be touch and go. As it turned out, we did not get there, through no fault of anyonesensible contributions were made on both sides of the House. It reflects the need for much greater flexibility if we are to do our job properly.

Bob Ainsworth: I thank the hon. Gentleman for that intervention. The only thing that remains to be said is that no insult to another place was intended by anyone in the House. I congratulate the Opposition Whip on the way he exposed the problem to maximise the difficulty that we had in another place. I thank hon. Members for their courteous remarks about me and everyone else who served on the Bill. A lot of Members put a lot of effort into it. I appreciate that.
	Lords amendment agreed to.

POLICE REFORM BILL [LORDS] (PROGRAMME) (NO. 4)

Motion made, and Question put forthwith, pursuant to Order [28 June 2001],
	That the following provisions shall apply to the Police Reform Bill [Lords] for the purpose of supplementing the Order of 7th May 2002:

Consideration of Lords Amendments

1. Proceedings on Consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.

Subsequent stages

2. Proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.[Mr. Caplin.]
	Question agreed to.

Police Reform Bill [Lords]
	  
	After Clause 4

Lords amendment: No. 2A to Commons amendment No. 2, after (1)(b), leave out paragraph (2) and insert
	(2) If the Secretary of State considers that remedial measures are required in relation to any matter identified by the report, he may direct the police authority responsible for maintaining the force to submit an action plan to him.
	(2A) An action plan is a plan setting out the remedial measures which the police authority proposes to take in relation to the matters in respect of which the direction is given.

John Denham: I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this it will be convenient to consider Lords amendments Nos. 2B and 75A to 75D.

John Denham: I hope that I can be brief. These amendments made in another place reflect the constructive exchange that I had with the right hon. Member for West Dorset (Mr. Letwin) on Report on 10 July.
	By Report, I think that a consensus had been reached that the Home Secretary of the day should have the power to intervene in a force when all other local avenues for addressing poor performance had failed. We had also reached agreement that in order to ensure that effective remedial measures are taken, the Home Secretary should be able to call upon the police authority to submit an action plan.
	The intention behind the Government amendments, agreed on Report, was that while the Home Secretary should be able to direct a police authority to submit an action plan, he should not be able to make a direction as to the remedial measures to be contained in the plan. However, it was evident from the debate that that intention did not come through sufficiently clearly in the revised clause 5.
	The amendments made in another place simply seek to put beyond doubt that the content of an action plan is entirely a matter for the police authority, in consultation with the chief officer. The Home Secretary will be able to comment on the plan if he thinks that it does not adequately address the failings identified in the report from Her Majesty's inspectorate of constabulary, but he cannot insist that changes be made.
	Incidentally, the amendments also correct an infelicity in the drafting of subsection (10) of the new section 41A of the Police Act 1996 inserted by clause 5. I commend the amendments to the House.

James Paice: I thank the Minister for the way in which he has handled this legislation all the way through and the constructive way in which he has approached disagreements, which these amendments, as he says, seek to deal with. The House is aware that clause 5 was originally removed in the other place as a result of widespread concern expressed on both sides of the other place, from all levels of the police force and from the Association of Police Authorities. All of us believed in the importance of the tripartite arrangements and of keeping the police separate from Government. As the Minister rightly said, my right hon. Friend the Member for West Dorset (Mr. Letwin) made it clear on Report that the Government amendments tabled then, welcome as they were, did not go far enough.
	The House will be unsurprised to know that we welcome these amendments, but it must be said that they represent the Government's final retreat from the swingeing powers of intervention that clause 5 in its original form represented. We said from the outset that the Home Secretary should not be able to require action plans purely on his own whim; now, he will not, as such a requirement must be the result of an inspection report. We said that he should not be able to direct chief officers; now, he will not, as we have re-interposed police authorities. We also said that he should not be able to dictate the content of the action plans. Now, these amendments remove the final vestige of those powers, so they are welcome.
	However, let no one be in any doubt about the huge effective power that the Home Secretary has, and which he will continue to have as a result of the Bill. The Home Secretary himself seeks to underestimate that power, yet it is obvious on looking at the street crime initiative. We welcome the amendments, but despite them, it will be a brave chief officer who goes against the declared wishes of the Home Secretary. Although I wish the legislation well when it is enacted, I hope that there remain some such courageous chief officers.

Simon Hughes: This is an unusual event for me, in that I happily delegated Police Reform Bill responsibilities to my hon. Friend the Member for Lewes (Norman Baker), and I pay tribute to him and my hon. Friend the Member for Mid-Dorset and North Poole (Mrs. Brooke) for their work.
	As the hon. Member for South-East Cambridgeshire (Mr. Paice) and the Minister suggested, we are left with one issue. As the Minister knows, the reality is that many issues were bounced around in respect of a Bill that was generally acceptable; however, accountability remained a big issue throughout its consideration. To be honest, it took a lot of effort on the part of both Houses to sort out the central issuethe relationship between the Home Secretary of the day, police authorities and the chief officers.
	The provisions are the result of efforts on all sides to try to understand that the Bill ought not to change the constitutional position. Chief officers, once appointed, have operational authority, and they are accountable to police authorities, not to the Home Secretary. I pay tribute to my colleagues, and to Conservative and Labour Members, for understanding that point in the end, and for trying to ensure that some agreement was reached. The provisions are the result of that process.
	It is good, too, that the same relationship is understood in respect of the National Criminal Intelligence Service and the National Crime Squadthe two bodies with national policing responsibility. The reality in Britain at the moment is that we have two national squads in England and in Wales, a regional police force for Londonthe Metropolitan police forceand other territorial forces. There is also an entire range of additional forces, such as the British Transport police. In general, we do not have regional policing, but it is important that all such bodies are accountable, and this is a welcome step down that road.
	We are left with areas in which, to our sadness, we still do not have accountability. The Minister knows what they are, and we are still sad to note that the option remains of the police accrediting people who are not police officers to do their support job. That is not truly accountable policing. In effect, such people constitute privatised, private sector support for the police. Instead, they should be accountable to local authorities or to central police authorities. We tried hard to amend the Bill so that both transport and special community support officersaccredited officersand accredited officers in general, were covered by the complaints system. In other words, if a member of the public was concerned about the activity of somebody who was not a police officerbut who was working for, or accredited by, the policethey could raise them in the same way. We regret that these amendments do not go so far as to include that provision.
	That is not to say that progress was not made, of which these amendments are the last symbol. There were significant achievements, such as the removal of the Henry VIII clause. The principle of no detention for community support officers was also dealt with at the end of the negotiations. Also, the giving of directions directly to chief officers gave way to a much more proper relationship between the Home Secretary and the police authorities, leaving the authorities to decide what they should do.
	We accept the amendments and we will not divide the House today. As the Minister knows, we did not press other matters in the Lords on which we disagreed with the Government because we accepted the merit of getting this legislation on to the statute book before the summer recess. However, I hope that two messages have come out loud and clear from our deliberationsone for the Government and the other for the police. I hope the Government have got the message that Parliament will resist policing becoming a tool of central Government. We have made that point in both Houses and preserved the proper status quo, and I do not believe that Parliament has the will to change that. The message that I hope the police have got from this legislation is that, in certain respectsparticularly nowthey must do better. The Billthis is the last piece of the jigsawhas given the police the power to employ many additional people, as civilians, to assist them. They now have the power to accredit other civilians as support officers to help them, and to employ community support officers to work for the police. Potentially, the police have another army of people, in addition to specials and to full-time officers.
	To the Government's credit, there are now more police officers than at any stage in recent history, and more money has recently been provided for policing. With all that on the table, the public expect two things. They expect a better clear-up rateon average, the current rate is under 25 per cent., and in places such as London it is only 11 per cent.and they expect a better response rate. Those messages, which have come out in all the debates on law and order in our communities and across the country, should be heard loud and clear by the police. We respect them and we are grateful for them, but we have now given them significant extra tools to do their job, and at a local level we will look to them to deliver. In that regard, both individual officers and chief officers will be accountable to their police authorities in the weeks ahead. I hope that the Government and those who run police forces and police authorities have got the message that the public expect them both to do their job properly. The public also expect the Home Secretary to let the police get on with the job, and not to interfere in the way in which they do it.

Annette Brooke: I wish to thank everyone who has served during the Bill's passage, which has been a great pleasure. I had one question at the end of Third Reading and I hope that someone will be tolerant enough to answer it. What accountability will there be for the fines imposed by accredited safety officers? Where will the money go? How will the chain of accountability work between various employers in the public and private sectorsincluding a halfway house or a housing associationand the respective police authority?

John Denham: I apologise to the House for temporarily stepping outside for a moment, but I have been briefed on the issues that were raised. I am grateful to the hon. Member for South-East Cambridgeshire (Mr. Paice) and, in particular, the hon. Member for Surrey Heath (Mr. Hawkins). I am sure that the hon. Member for Southwark, North and Bermondsey (Simon Hughes) will not mind if I congratulate his hon. Friend the hon. Member for Lewes (Norman Baker) and the hon. Member for Mid-Dorset and North Poole (Mrs. Brooke) on their constructive role in the Bill's passage.
	I do not want to over-rehearse the arguments, as I could do were I to respond to talk of a final climbdown. I seem to remember that, six months ago, the Conservative party said that there were no circumstances whatever in which this type of interference could be justified. Now we find that the point has been conceded.
	We have found a sensible way to address effectively the small number of cases where those responsible locally for ensuring that we have good policing have failed to do so. That is the defence against the argumentwhich I refute utterlythat asserts that we have been responsible for trying to undermine the tripartite arrangements. We are great believers in that arrangement as a balance between the Home Secretary, police authorities and chief officers. The importance that we attach to the relationship should not blind us to the possibility of circumstances where one or more legs of the arrangements fails. In those circumstances, the publicwho, after all, the relationship is there to servemust be protected.
	That part of the Bill has attracted the most attention during its passage. Interestingly, it will be used far less than other parts of the Bill that received less attention and which will have a greater effect in raising standards. If we have to use the power, it can only be because the other things that we have set in place, on which there has been agreement, have failed.

James Paice: I do not wish to take issue with anything that the Minister has said. I want to place on record that I was briefed as to why it was necessary for him to leave the Chamber. I think that it is a tribute to his dedication that he came back in to reply to the debate, which, in my view, was unnecessary. I pay tribute to him for showing such commitment to the House.

John Denham: I am very grateful to the hon. Gentleman, whose remarks are very much appreciated.
	We are bringing discussions on this Bill to a close. There is a real commitment among those who have participated in the debates to support the police in serving communities up and down this country. We have provided a Bill that will support the police as they do their job. I am grateful to everyone who has participated.

Simon Hughes: I endorse the comments of the hon. Member for South-East Cambridgeshire (Mr. Paice), and I am grateful to the Minister. Before the Minister utters the final words on the Bill in this House, will he answer my hon. Friend the Member for Mid-Dorset and North Poole (Mrs. Brooke), who deserves an answer for her persistence? Her question is a good one that is relevant to the matter being debated. If he cannot answer now, will he promise that she will be answered before he goes on holiday? If so, we will go away even happier than we might otherwise have done.

John Denham: I am in the odd position, as sometimes happens with Ministers, of having in front me an answer for which I cannot locate the question. With that in mind, it is probably better if I write to the hon. Lady, as the hon. Gentleman suggested.
	Lords amendment agreed to.
	Subsequent Lords amendments agreed to.

Mobile Telephones (Re-Programming) Bill [Lords]

Considered in Committee.

[Sir Michael Lord in the Chair]
	  
	Clause 1
	  
	Re-programming mobile telephone etc.

Norman Baker: I beg to move amendment No. 1, page 1, line 2, after if, insert
	'personally or through an agent and whether in the United Kingdom or abroad'.
	With due respect to the Bill, which is important, we have reached the fag end of this parliamentary Session, so I shall not delay the House for very long. I suspect that I would become deeply unpopular if I were to do so on this occasion.
	The Minister will know that, on Second Reading on Monday, I said that there was strong support for the Bill among Members on both sides of the House and that there was no dispute about what the Government were trying to achieve. However, Members were concerned that, unless the Bill could be enforced more widely, it would lose some of its effectiveness.
	The Bill would not curtail the big fish who are making multi-million pound sums from sending phones abroad for re-programming. They could simply circumvent the Bill by moving their activities abroad and bringing the phones back; as a consequence, they would carry on regardless. The Bill would pick up the small frythe youths or others engaged in this activitybut not the big fish. The Government, to their credit, have sought to try to pick up the big fish, not just under this Bill but under the Proceeds of Crime Bill that we debated earlier.
	The amendment is an attempt to ensure that the seriousness of the issue is not neglected and that the Government pursue thoroughly contact and discussions with their EU counterparts to find a way of ensuring that people simply cannot disappear to another EU country and re-programme phones. Two days ago, I gave the example of people in Northern Irelandwhere the law is meant to apply, should it be passedwho simply cross the border to the Republic, where they are beyond the jurisdiction of the Bill. It is not simply about the EU; we need an international agreement.
	I hope that the Minister has sympathy for the amendment. He may find reasons why he cannot accept itI shall not lose any sleep if that is his viewbut I hope he understands that we feel strongly that it is in the interests of the Bill, which we support. We must ensure that people engaged in this activitya multi-million pound fraudare stopped in their tracks. We do not want them to circumvent the Bill. If he cannot accept the amendment, I hope that the Minister will identify ways in which he is seeking to deal with the loophole.

Dominic Grieve: I have to tell the hon. Member for Lewes (Norman Baker) that before the Committee stage of the Bill I went to the Library to see whether it could be improved. I read what was said in the other place in Committee and I have to inform the hon. Gentleman that, in my view, there was little more that could be done to improve the Bill, although there is one matter that I shall raise in due course.
	The scope of the amendment is hair-raising. If the House were to accept it, we would be legislating on unique device identifiers on behalf of the entire world. I know that at times a certain degree of megalomania prevails in this Chamber, but it would take our powers too far to criminalise the actions of those living in Borneo, the Fiji islands, central Africa or wherever else, by saying that they have no right to tamper with a unique device identifier, even if the laws of their country say that that is acceptable, so that the moment they stepped off an aeroplane on a visit to the UK the hon. Gentleman could whiz off to a magistrate and insist on the issuing of an arrest warrant. I hope that the Minister will reject the amendment in short order.

John Denham: The hon. Member for Lewes (Norman Baker) anticipated that I might find reasons not to accept his amendment, which suggests that I have form on these matters. I am grateful to the hon. Member for Beaconsfield (Mr. Grieve) for his comments. This is a short Bill, but it has been worked on by my officials, by the mobile phone industry and by the police who will be responsible for enforcing it. Much work has gone into getting the drafting right.
	The amendment would add the words through an agent to the Bill. Of course, anyone who personally carries out reprogramming in the United Kingdom would commit an offence under clause 1. We believe that this will have a deterrent effect on those who would carry out that work, whether or not they were acting as an agent for someone else. If a person asks another, his agent, to carry out reprogramming, depending upon the precise circumstances of the case, he will be guilty of one of the offences of aiding, abetting, counselling or procuring the offence of reprogramming a mobile phone. The punishment for that is identical to that for the main offence under the Bill. Furthermore, if the person asking an agent to carry out the reprogramming supplied the equipment for that purpose, he would be committing an offence under clause 2. The words suggested in the amendment are unnecessary.
	The hon. Member for Beaconsfield was right about international enforcement. On Second Reading, the Member for Lewes made a legitimate point about the international tradeand I agree with himbut the Bill cannot be used to tackle that. It would be a very big step to extend the jurisdiction of courts in the United Kingdom to cover reprogramming when it is carried out abroad. Some very serious offencessuch as piracy and aircraft hijackingcan be tried in the United Kingdom wherever they occur and whatever the nationality of the ship or aircraft, or defendants. Other offences may be tried in the United Kingdom if the defendant is a British citizen or resident. Those include murder and manslaughter on land, bigamy, offences under the Official Secrets Act 1911 and, under the War Crimes Act 1991, offences of murder committed in Germany or in German occupied areas during the second world war. The Sex Offenders Act 1997 also dealt with sex tourism by making it an offence in the UK to commit certain serious sexual offences abroad that involve young children.
	It should take nothing away from the importance that I attach to the Bill to say that mobile phone reprogramming does not fall into the same category as the other offences that have international jurisdiction. Moreover, the hon. Gentleman omitted to include the usual safeguards that are put in place when extending jurisdiction. It does not, for example, limit proceedings to British citizens or residents and it does not require the conduct to be an offence under the laws of the foreign state.
	I must resist the amendment, but we need to build on what we have done. As I said on Second Reading, my officials are involved in discussions about how our work can be replicated as best practice across the European Union. The hon. Gentleman mentioned Ireland, with which we share a land border, and we will have discussions with the Dublin Government to seek ways forward. It is important to tackle this as an international problem, but I invite the House to resist the amendment.

Norman Baker: After that, I am tempted to ask the House to resist the amendment myself. I do not want to sound too demob happy, because the amendment has a serious point. I am happy to have had the opportunity to express that point and the Minister answered it in his remarks. I am grateful for his assurance that he will take the matter forward at European and international level, which is what I wanted placed on the record tonight. In drafting the amendment, we had little confidence that it would be accepted and therefore we did not pay as much attention as we normally would have done to its wording. I beg to ask leave to withdraw the amendment.
	Amendment, by leave, withdrawn.
	Clause 1 ordered to stand part of the Bill.

Clause 2
	  
	Possession or supply of anything for re-programming purposes

Norman Baker: I beg to move amendment No. 2, page 1, line 18, leave out from which to and in line 20 and insert
	'in conjunction with equipment capable of interfering with the operation of unique device identifier may be used for such purposes'.
	The amendment seeks to reactivate the issue raised by the Minister's colleague, Lord Campbell-Savours, in the House of Lords, which I mentioned briefly on Second Reading. I remind the Minister that Lord Campbell- Savours was concerned that the word anything in clause 2(1)(a) would allow innocent parties to be subject to the legislation in a way that the Government did not intend. He gave the example of a cable that could be held by someone and which would leave him or her liable to action under the terms of the Bill.
	Lord Campbell-Savours sought to amend the legislation in a way that did not find favour with the House of Lords, and the amendment seeks an alternative way. The object of the amendment is to prevent innocent parties from being wrongly caught up in the legislation, without weakening the purpose of the Bill which, as I have said, we entirely support. I do not know what the Minister will say in reply, but if he does not like the amendment I hope that he will at least recognise the point behind it. I would be grateful if he would respond to the point made by Lord Campbell-Savours that the terms of the Bill leave open the possibility that someone could be wrongly caught up in the legislation.

Dominic Grieve: In a spirit of co-operation with the Government, I have to tell the hon. Member for Lewes (Mr. Baker) that although I have greater sympathy with the intention behind this amendment, it does not take matters much further. Clause 2 as worded clearly requires the prosecution to prove two things, the second of which is the intention
	to use the thing unlawfully for that purpose.
	Therefore, it is inconceivable that a person could be convicted on evidence of possession of a cable in the absence of other evidence. There would have to be a causal connection between having the cable, a screwdriver or some other implement and some other evidence that tied it in with the altering or reprogramming of telephones. In those circumstances, and subject to anything that the Minister might say, I hope that he rejects the amendment.
	To save debate on clause stand part, I may say that my only query is about the heading of the clause:
	Possession or supply of anything for re-programming purposes.
	However, the clause refers to a person having something
	in his custody or under his control.
	That is the correct terminology, because it has always been my understanding that the courts and Law Commission have expressed increasing unhappiness about the use of the word possession. It may mean something more or different from having something in one's custody or under one's control. In those circumstances, I wonder why we continue to use the word possession in the clause heading, when it has properly been removed in the body of the clause. I am aware that it is the text of the clause that matters and not the heading, but is not it time that we buried the word possession, because it causes some difficulties of understanding and interpretation?

John Denham: I congratulate the hon. Gentleman on the seriousness with which he has approached what is, despite its significance, a brief Bill, and the amendments to it. In his analysis of the amendment, he could have been reading almost directly from my brief about its legal implications. He is absolutely right that the structure of the clause relies on the necessity to prove intent. The consensus of everyone who was involved in helping to shape the legislation was that to try to define this provision in terms of specific types of equipment, whichever words we used, would create more problems than using the wording that is in the Bill. There is a further concern that, inadvertently, the amendment might narrow the offence unacceptably, making it more difficult to secure prosecutions.
	I believe that the balance is about right. I am certain that no innocent party could be caught up in this legislation, because of the way in which it is phrased and the fact that knowledge or belief of intent would have to be proved. However, I consider that it is a reasonable point for the hon. Member for Lewes (Mr. Baker) to explore.
	As the hon. Member for Beaconsfield (Mr. Grieve) said, the title of the clause has no legal effect. I am advised that the term possession appears in the title of the clause as shorthand, and no more than that, for what the clause is about, in the same way as telephone appears in the title of the Bill and that of clause 1. That is what I am advised, so I shall share my advice with the hon. Gentleman. I hope that, in light of what I have said, the hon. Member for Lewes may feel able to withdraw his amendment.

Norman Baker: I probably do feel able to withdraw, as the Minister gently puts it. I am grateful for his considered assurance that he is certain that no innocent party will be caught up in the legislation. That is the assurance that I wanted and I am happy to have that on the record. In the circumstances, I happily beg to ask leave to withdraw the amendment.
	Amendment, by leave, withdrawn.
	Clauses 2 and 3 ordered to stand part of the Bill.
	Bill reported, without amendment.
	Order for Third Reading read.

John Denham: I beg to move, That the Bill be now read the Third time.
	This is a brief but important Bill. I am grateful to hon. Members for their support for the Bill, for their contributions to the debate and for their sensible co-operation in securing the Bill's passage.
	As we have established, and as the Government have said, the Bill is not a panacea. It is one of a comprehensive package of measures that the Government are putting in place to tackle mobile phone theft and, more broadly, street crime. I can reinforce that. I will not name the operator because it would be unfaira number of companies have writtenbut one of the mobile phone operators has written, setting out all the measures that it has taken in terms of its own operations and in co-operation with other companies, and has told my right hon. Friend the Home Secretary in that letter:
	To simultaneously tackle the problem of IMEI re-programming,
	the company
	has supported the Home Office with the introduction of suitable legislative changes. We were delighted to see the early introduction of the Mobile Telephones (Re-programming) Bill and very much hope that this bill will receive Royal Assent before the summer recess. The fact that it will then be a criminal offence to either alter the IMEI of a handset or to be in possession of the necessary equipment to do so (with intent) will send out exactly the right messages.
	That company is also backing up what we have all been doing with its own crime prevention campaign, which I also welcome.
	The Bill has an important role. It is welcomed by the police and the mobile phone industry. I believe that it will also be welcomed by consumers and customers, who will know that they will be better protected as we reduce the value of a stolen mobile phone.
	There are issues to take forward in the wider campaign and on the international front. There are important issues to be developed in relation to the effective enforcement of the Billan issue that was also raised during the earlier stages. Looking to the future, as the third generation of mobile phones comes in, we will continue our work to ensure that security devices are built into phones from the beginning, so that we do not have to address any problem after it has occurred. We have done a useful piece of work with the Bill tonight.

Dominic Grieve: I am delighted that the Bill should pass through the House so quickly and, I hope, with proper scrutiny. There is always a slight anxiety that legislation that commands universal approbation often causes problems later on. This Bill is the complete antithesis of the Proceeds of Crime Bill, on which we laboured for so long and which we only concluded this evening.
	The Minister is quite right that the Bill is not a panacea. There will a be considerable onus on the industry to ensure that reprogramming becomes more difficult in future; otherwise we shall put a large number of people in the way of temptation to do just that, and they may be willing to incur the possible criminal penalties.
	It may well turn out to be very difficult to detect and arrest those who re-programme because it could turn from being a high-street activity into a back-room industry. That is plainly undesirable, but the Bill is at least a step in the right direction. On behalf of the Opposition, I welcome it, and I congratulate the Government on getting it on to the statute book so quickly.

Norman Baker: I, too, welcome the position in which we now find ourselves and look forward to Royal Assent being forthcoming before very much longer. I very much hope that it happens within the next couple of days. I also welcome the starring role of the hon. Member for Hove (Mr. Caplin), who made his contribution from the Treasury Bench between Committee and Third Reading. He used to make much larger contributions when he was leader of Hove borough council. He is now constrained to make much more formal contributions to the House in a much more limited fashion. No doubt his constituents will reflect on that famously at the next election.
	As hon. Members have said, the Bill is not a panacea. It is a good Bill; it will go a long way to deal with the problem, and I shall not repeat the arguments and points that have been made. However, I want to raise one substantive issue with the Minister on Third Reading. It is important to try to monitor how effective the legislation is when it comes into force to find out whether it has had the effect that we all hope it will have, or whether it has not because of the international dimension or for other reasons. I sometimes think that we are very good at passing legislation, but not very good at measuring it subsequently to find out how effective it is.
	I wish to refer to the reasons why someone might want to steal a mobile phone. When we began to consider the Bill, I certainly thought that the reason for stealing a mobile phone was simply to acquire it for use. That may seem rather obvious; but, on Second Reading, we were given three other reasons why such a theft might be reported. The obvious reason is to acquire it for use. The second reason is that someone might want to steal a mobile phone for the accessories around ita point made on Second Reading by the hon. Member for Glasgow, Anniesland (John Robertson). The third reason is to prevent someone who was subject to an attack from using it to call the police; in those circumstances, the mobile phone itself is not wanted and is subsequently discarded. The fourth reason is that the phone was not actually stolen at all but is part of a fraudulent insurance claim.
	I do not know whether this would be practical, but it would be useful to try to analyse the reasons why allegations of mobile phone thefts are made. That would be helpful in analysing how effective the Bill is when it becomes law, as it will very shortly. It would also be helpful in identifying whether any further measures are necessary subsequently to plug any loophole that may transpire.
	This is a short but useful Bill. I very much hope that it will be as effective as the Government wish it to be, and I wish it well on its way.
	Question put and agreed to.
	Bill accordingly read the Third time, and passed, without amendment.

Sitting suspended pursuant to Order [1 July].
	On resuming

PETITION
	  
	Ancient Forests

Joan Walley: In the final minutes before Parliament closes for the summer recess, and on the day when the Environmental Audit Committee has published its report on timber and the Government have published their response to the Select Committee report on preparations for the world summit on sustainable development, I am pleased to present this petition from Stephen Tindale on behalf of Greenpeace.
	It is vital that our Prime Minister leads the way at the world summit in Johannesburg next month. We wish him well. The petition declares:
	that since the Rio Earth Summit ten years ago an area of ancient forest bigger than France or Spain has disappeared; that today we are losing an area of ancient forest the size of a football pitch every two seconds; that as this destruction continues thousands of plants, animals and indigenous communities will be put at risk; and that 49,000 individuals have contacted the Prime Minister expressing their concern about the destruction of ancient forests and asking him to take action to save them.
	The petitioner therefore requests that the House of Commons urge the Prime Minister to push for strong international action to end the trade in illegal and destructively logged timber.
	To lie upon the Table.

EU Age Discrimination Legislation

Motion made, and Question proposed, That this House do now adjourn.[Mr. Ainger.]

Robert Jackson: It is agreeable to have the penultimate word before the summer recess begins in this Session of Parliament.
	A humorous story was current in my youth at Oxford about the attempts of his colleagues some time in the late 1950s to persuade the last of Oxford's professors with life tenure to retire from his chair. That was Canon Claude Jenkins, Professor of Ecclesiastical History. He was a self-confident nonagenarian, well known for his donnish wit. A great dinner was organised in his honour, at which lavish valedictory encomia were pronounced. But when the great man rose to his feet, he dashed the hopes of his friends with the opening phrase of his speech. He said he was
	of a modest, but not of a retiring disposition.
	I have sought an Adjournment debate because I fear that if the Government and Parliament are not careful, scenes of that kind, entertaining but also a bit disturbing, will be a feature not just of the past but of the future.
	The Government are consulting on the implementation of a directive adopted by the European Union in November 2000
	establishing a general framework for equal treatment in employment and occupation.
	That directive requires national legislation in each of the member states to give effect to its objectives, which include the imposition of legal penalties against discrimination in employment on a number of grounds, including age. The Government have said that they intend to proceed by way of regulations and guidance to give effect to that portion of the directive at some point before the end of 2006.
	As I hope to show, the directive has potentially profound and wide-ramifying implications for an important sector of our national lifeour universities. It also has serious implications in many other areas such as the judiciary, the civil service, the military, and the medical profession. In these circumstances, the Government should think again about the way in which they propose to handle this legislation.
	There is a serious case, which I shall draw to the attention of my right hon. and hon. Friends on the Opposition Front Bench, for its being treated as primary legislation. Certainly, it should be considered by the relevant Select Committees, and I shall write in that sense to their Chairmen. If it is to be treated as secondary legislation, to attempt to pass it by way of the negative resolution procedure would be an abuse of Parliament. Assurances from the Minister on those points would be very welcome at this stage.
	My purpose in seeking this Adjournment debate is to draw the attention of the Minister for Lifelong Learning and Higher Education, at this very early stage to the serious implications that the regulations and guidance will have for the universities of the United Kingdom. My standpoint is not one of outright opposition to the abolition of mandatory retirement ages in academe, or to other age-based mechanisms that have been evolved in our universities to try to manage the process of academic succession. These are arrangements that it may be right and proper to review, but I want the Minister and her officials in the Department for Education and Skills to take the seriousness of this issue on board;, to reflect on the problems which may arise; to listen to the universities, and to ensure that their interests are properly taken into account alongside the myriad of other interests that will be affected by this far-reaching legislation, which will of course be handled by another Department with its own agenda.
	My anecdote about Canon Claude Jenkins should remind us that this question has a long history. Mandatory retirement ages in the universities were a 20th-century phenomenon; Canon Claude's leaving dinner in the late 1950s was necessary because his appointment to his chair preceded their introduction.
	At the beginning of this discussion, I want to make a fundamental point. The introduction of mandatory retirement was, I believe, closely bound up with the professionalisation of university life. In the early 20th century, professionalism and corporatisma word that is somewhat discredited nowadayswent hand in hand. Professionals were understood, by themselves and by wider society, as having a shared responsibility for the future of their disciplines, and for the institutions in which they worked. They accepted that those wider collective or corporate interests might give rise to constraints on their personal interests. For example, they could be expected to retire at a time not of their choosing, in order to assist the timely renewal of the personnel of their profession.
	Mandatory retirement was made possible by the introduction early in the 20th century of pensions for retired academics. In the United States, the first academic pension schemes were a private initiative. The great philanthropist Andrew Carnegie, who was responsible for this initiative, explained his purpose in these important words. In the absence of a mandatory retirement age,
	able men hesitate to adopt teaching as a profession and many old professors whose places should be occupied by younger men cannot be retired.
	Thus there is at stake in this debate not only the question of whether a mandatory retirement age and other age-related discriminations are still necessary for the proper management of academic succession, but the more fundamental question of the future of the corporate professional ethos in university life.
	Over the past couple of decades, the corporatism of professional life in generalin the universities and elsewherehas been challenged from many different directions. Thatcherism might be said to have been one such challenge. One other is the spread and intensification of the philosophy of individual human rights. This is the ideology which underlies the European directive whose effects we are considering tonight, which is aimed at protecting the right of individuals not to be discriminated against, inter alia, on the ground of age.
	Let me say in passing that I believe that this directive ought to have raised questions of subsidiarity which the Government should have pressed harder in the Council of Ministers. But having made this point, I want to stress that the issue here is not essentially one of European intrusiveness. Legislation to protect the right of individuals not to be discriminated against on the ground of age is not a supposedly alien continental phenomenon. It originates in our Anglo-Saxon culture of fundamental rights. Germany and France have mandatory retirement policies which, like ours, will have to be modified as a result of this directive.
	The true origin of this directive is to be found in the United States, in the Age Discrimination in Employment Act 1986. Similar legislation followed in Canada, and in Australia and New Zealand in the late 1990s. I want to urge the Minister to ensure that the experience of these other English-speaking countries is carefully evaluated as the Government proceed to implement this directive. In 1990, the Canadian Supreme Court found that it was constitutional in Canada to retain mandatory retirement for the university faculty. The arguments there repay closer study.
	Above all, the Minister should reflect on the experience of the United States. There, a temporary exemption from the provisions of the 1986 anti-discrimination law was granted to post-secondary institutions so that a mandatory retirement age, raised to 70, was permitted. This exemption was reviewed by Congress in the early 1990s, and the exemption was dropped in 1994.
	I have a copy of an important study published in November 2001 by Ashenfelter and CardI would be happy to give it to the Ministeraddressing the question,
	Did the Elimination of Mandatory Retirement affect Faculty Retirement Flow?
	Among other findings, this study concluded that there has been a marked increase in the fraction of faculty who continue working into their seventies.
	In the mandatory era, the average retirement rate of 70-year-olds was about 75 per cent, while the rate for 71-year-olds was about 60 per cent. Immediately after the prohibition of mandatory retirement contracts both rates fell to under 30 per cent.
	The Minister should look at this study, and others. They will not, of course, tell us precisely how legislation of this kind might impact upon the particular circumstances of British universities. But she might like to reflect on the implications of this sentence in the study I have been quoting:
	consistent with simple models of retirement incentives . . . people with higher salaries or lower pension wealth are less likely to retire at any given age.
	As it developed in the 20th century, the regime of mandatory retirement ages was associated with the development of salary scales that rewarded older workers to help them prepare for retirement. When there was no mandatory retirement, academic pay was typically a fixed value emolument, or an entitlement to a variable dividend. I do not suppose that the universities or their staff would want to go back to those arrangements, but the fact is that under our current arrangementsdeveloped as a consequence of mandatory retirementolder staff are more expensive and, if the American experience applies, will accordingly have a greater financial disincentive to retire if they have a free choice. This is a general point, applicable to both the UK and the US.
	More particularly, in the UK, the academic profession is less well paid and endowed with less generous pension schemes than in the US. The disincentive here to retire will therefore be greater, and the incentives to carry on, in terms of pension access, will be less.
	I want briefly now to draw attention to the possible consequences for the Government, some way into the future, if this legislation and the current structure of economic incentives result in many more academics staying in post for rather longer. In my own time as Minister for Higher Education in the late 1980s I saw at close hand the expensive and painful consequences of trying to put right imbalances in the age structure of university employment. The financial rigours of the early 1980s impacted on universities which had recruited a large cohort of young staff in the early 1960s. Those were men and women who were growing older together and also becoming more and more expensive to employ. The result was a series of early retirement programmes, funded by the state. Those were clumsy in their application and perverse in their effects
	It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
	Motion made, and Question proposed, That this House do now adjourn.[Mr. Ainger.]

Robert Jackson: As I was saying, the best staff, those most capable of finding employment abroad, were often the ones who signed on for the packages. The programmesand I stress this to the Minister, because her colleagues will be interestedwere also very expensive for the Treasury. New blood had to be paid for, and it was not cheap. If the Government proceed with legislation that abolishes mandatory retirement ages in universities, I foresee a requirement for further and repeated new-blood schemes.
	I hope that the Government will bear those points in mind as they reflect on the legislation that they are committed to bringing forward. The directive provides that discrimination may be acceptable, when it is
	objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.
	It also makes reference to justification on the basis of legitimate employment policy and in the light of
	labour market and vocational training objectives.
	The Government may be tempted to leave the interpretation of those exemptions to the courts.
	I do not expect that the Minister tonight will be able to express a view on that point, but I want to counsel the Government against yielding to any such temptation. If the Government do not give legislative guidance to employers on those pointsespecially, I might add, to university employersthey will certainly be advised to minimise the risk of legal challenge, and maximise the changes proposed by the directive. Important socio-economic and political judgments are involved here, and it would be an abuse not only of Parliament but of the courts to remit those questions to unelected judges.
	I therefore put it to the Minister, first, that it is for the Government and Parliament to determine whether mandatory retirement can have a legitimate aim in universities, which is objectively justified on grounds of legitimate employment policy; and, secondly, that it is for the Government and Parliament to consider whether that instrument, which has helped to realise that aim through most of the 20th century, remains appropriate and necessary.
	People todayespecially middle-class peopleare living longer and more productive lives. Quite apart from the application of ideologies of individual human rights, that is bound to present a challenge to the institution of mandatory retirement in every walk of life. We do not have mandatory retirement for Members of Parliament of course, but it may be an issue with our electorate.
	I want to make just two final points before sitting down. Both of them have to do with the nature of intellectual workthe teaching and the research that are the business of universities. The first is that there is no reason why a compulsorily retired academic with an adequate pension and appropriate access to the necessary facilities should not continue to research and to write, and even to teach. The life of the mind does not have to be lived in and through a university job. A gentle separation from university employment does not entail a separation from one's discipline. The second and concluding point is that, more than in most walks of life, the work of universities requires that the wisdom and experience which often come with age should not be allowed to crowd out the innovativeness and flexibility of mind which is generally the prerogative of youth. Socrates needed his young companions, and let us not forget that one of those young companions was Plato.

Margaret Hodge: I congratulate the hon. Member for Wantage (Mr. Jackson) on giving the penultimate speech in the final debate before the recess, and it falls to me to respond to it. Both the hon. Gentleman and Iand perhaps you, too, Mr. Speakerhave a little bit of self-interest in the issue of age discrimination, in that we are of an age when we might suddenly start facing discrimination everywhere, probably, except in the House. However, I like to think that, as someone said to me when I reached my 50th year, the 40s are the old age of youth and the 50s are the youth of old age, which means that we have a long way to go.
	Unfair discrimination is intolerable, as I hope the hon. Gentleman agrees. We need to tackle the unthinking prejudice that blights lives and is a cost to the economy. Older people form a major and growing section of the population, and our skills, talents and contributions needed if we are to create a successful society and economy. That applies as much to universities and other institutions of higher education as to manufacturers of widgets.
	Although it is fair to say that the over-50s suffer the most from age discrimination, it is not the exclusive province of older people; younger people can also experience ageist practices. We have all heard of whiz kids doing well in the City, but we have also heard of people who cannot get jobs in IT at 30 because they are over the hill. Talented, qualified and ambitious young people are discriminated against in the labour market because they are deemed to be too young and too inexperienced. Thus age discrimination can hit the old and the young.
	Employers who discriminate on the grounds of age not only miss out on the skills and experience of a diverse work force, but harm their bottom line. Government estimates of the annual cost to the economy range from 16 billion in the Cabinet Office report, Winning the Generation Game, to 31 billion in a study by the Employers Forum on Age, Ageism: Too costly to ignore.
	I hope that the hon. Gentleman will agree that ageism in the workplace is wrong. Fairness at work and productivity go hand in hand and the best employers already know that they need to use the skills of all sections of their work force, irrespective of age. Universities are not in a special bracket that puts them beyond the reach of good practice.
	Too often in the past, older workers have been written off, even though they have much to offer. About 70 per cent. of people aged 50 or over are in employment, but the remaining 30 per cent.which is a lotfind that getting and retaining a job can still be a serious problem.
	The Government are committed to introducing legislation that will outlaw discrimination. In November 2000, the European Union Council of Ministers, together with the Government, adopted the employment equality directive. That will require all 15 EU member states to introduce legislation prohibiting direct and indirect discrimination at work on the grounds of age, sexual orientation, religion, belief and disability.
	We welcomed that employment directive from the outset, partly because it reflected much of our legislation, and because we thought that it was an important step towards ensuring equal opportunities for further sections of our communities, whether in this country or elsewhere in the European Union. However, as the hon. Gentleman pointed out, legislating against age discrimination is not simple. There are many complex and sensitive issues, which we need to address and resolve so that the eventual legislation is practical and helpful to both employers and employees.
	The directive recognises that differences of treatment on grounds of age can sometimes be justified. For example, it may sometimes be necessary to make special provisions for younger or older workers to protect their safety and welfare. Retirement age is another possible area of justification.
	The challenge that we face on implementing that directive is to identify which types of differences or treatment are acceptable, and which are not. That obviously requires very sensitive consideration in the light of the responses that we are receiving to our consultation.
	We in the United Kingdom have a fixed age for eligibility to the state pension, but that does not mean that we have a national mandatory retirement age. However, many sectors have established their own individual mandatory retirement ages, typically 60 or 65, but there are variations.
	A mandatory retirement age is an example of direct discrimination, which is prohibited under the directive. Article 6 of the directive, however, allows member states to implement legislation to provide exceptions to the general principle of non-discrimination on grounds of age if they are justified by reference, as the hon. Gentleman said, to objective, reasonable and legitimate aims.
	As the hon. Gentleman may know, we have already consulted on issues surrounding that difficult directive. We sought preliminary views on the retirement age, and the consultation was completed at the end of March. Analysis of some of the key responses to the consultation, which was called Towards Equality and Diversity, showed, unsurprisingly, that opinion on retirement age was evenly split, with employers and employer organisations generally favouring the ability to set the retirement age, for many of the reasons that the hon. Gentleman set out in his speech, and organisations campaigning for age equality preferring no retirement ages. However, even in those two broad groups, opinion was divided within some organisations.
	Some respondents thought that set retirement ages had advantages. As the hon. Gentleman said, they help personnel planning and create recruitment and promotion opportunities. But there were also disadvantages; they can contribute to creating a skills shortage, and they are unfair to competent staff who want to work beyond the normal retirement age.
	By far the most significant emerging view was that retirement should be more flexible, and I hope that the hon. Gentleman agrees. That view was certainly shared by all sides and by those respondents with a more neutral position. Some thought that the retirement age should be raisedsuggestions ranged from 65 to 75with flexibility to retire before or after, depending on agreement between the employer and employee.
	Fifteen universities responded to the consultation, a narrow majority of which were in favour of employers being able to require employees to retire at a certain age. The responses of those who were in favour reflect the responses from others: they said that retirement ages were necessary to manage their budgets and pension schemes, to help succession planning, and to avoid having to keep on poorly performing staff.
	Universities that thought that mandatory retirement ages should be abolished recognised the need to value diversity and the benefits of having access to greater experience for longer. They also recognised the need to judge people on the basis of their performance, rather than arbitrarily on their age, and acknowledged the contribution that older people can make to the economy.
	The responses suggest that these are complex issues, as the EU has recognised. For that reason, the directive allows member states up to 2006 to implement its provisions on age discrimination. The Government will take full advantage of the time available. That is the only way to do justice to the complex issues and to allow full consideration, in consultation, of the best way forward. We shall, therefore, bring legislation into force by December 2006, but we aim to have it in place in good time before then so that employers have sufficient time to make their preparations to comply.
	We are addressing those complex issues through a two-stage consultation process. First, we had the consultation, Towards Equality and Diversity, which finished at the end of March. From that consultation, we wanted to established what people thought about mandatory retirement ages, for example. As for justifications, we aimed to find out what practices employers have, why they need them and why they need to retain them.
	Now that part of the consultation has ended, we are in the process of developing specific proposals in the light of the responses, and we shall consult on them early in 2003. Of course, we are continuing to talk to stakeholders as we consider the options on which we shall consult formally next year. Officials have a programme of seminars with key stakeholders, such as big and small employers and trade unions, and I have asked them to engage with the higher education sector.
	The hon. Gentleman asked that we take account of the experience of other countries, such as the United States of America and Australia. When I had some responsibility for this issue, I visited people in both those countries to talk to them about their legislation on discrimination. The Americans have a different set-up in their country, and their Age Discrimination in Employment Act has been on the statute book since 1967, with various subsequent laws amending it.
	Although the American experience can provide us with useful lessons, experience from abroad also suggests that there are no easy off-the-peg solutions. The path to legislation, and the legislation itself, differs from country to country. Overseas experience suggests that age discrimination law is an evolving business. The case law in America bears that out. Although legislation introduced there in 1967 covered employment only, there have been several exceptions that restricted, for instance, the scope of the legislation to those aged 40 to 65. As I said at the beginning of my remarks, we want to tackle age discrimination against young people, too.
	Another clear message from overseas is that we need to find the solutions that best fit our particular experience. That view is reflected in the EU directive itself. Recital 25 of the directive refers to the fact that provisions in respect of age discrimination may vary in accordance with the circumstances in member states. That is our view. This is complicated business, and we need to get it right for our particular circumstances.
	We cannot tackle age discrimination through legislation alone, however. We must promote a change in the culture in the workplace. We need to get rid of those false stereotypes that characterise older workers as incapable of learning new skills, slow to adapt to change, and likely to take more sick leavestereotypes that universities, I am sure, will not want to perpetuate. Such stereotypes would undermine the very professionalism that the hon. Gentleman saysrightlythat universities have striven to achieve and wish to maintain.
	Other countries that have age legislation, such as the United States and Australia, have found that the effectiveness of legislation is greatly helped by operating it in conjunction with other policies that promote equal rights and educate employers about their obligations and rights. To help bring about that culture change, we introduced the code of practice on age diversity in employment, which was launched by what is now the Department for Work and Pensions in June 1999. It was produced in partnership with organisations such as Age Concern, the Trades Union Congress, the Confederation of British Industry and the Employers Forum on Age. It features practical guidance for employers, backed up by good case studies. It sets the standard for non-ageist approaches to recruitment, training, development, promotion, redundancy and retirement. I commend the code to universities and others.
	This is not legislation that employers should fear. It will not require any employer, let alone universities, to recruit or keep on someone who cannot do the job. It does not replace competence with age. In fact, recital 17 of the directive says:
	This Directive does not require the recruitment, promotion, maintenance in employment or training of an individual who is not competent, capable and available to perform the essential functions of the post concerned or to undergo the relevant training.
	I reassure the hon. Gentleman that I shall consider carefully all the points that he has made. We shall ensure that the higher education sector is fully engaged in the consultation process as we develop our proposals. Like all stakeholders, it will be able to let us have its views when responding to the next consultation exercise.

ROYAL ASSENT

Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
	Finance Act 2002
	European Parliamentary Elections Act 2002
	Copyright, Etc. and Trade Marks (Offences and Enforcement) Act 2002
	Justice (Northern Ireland Act) 2002
	Divorce (Religious Marriages) Act 2002
	Export Control Act 2002
	Proceeds of Crime Act 2002
	Police Reform Act 2002
	Mobile Telephones (Re-programming) Act 2002
	Education Act 2002
	Question put and agreed to.
	Adjourned accordingly at nineteen minutes past Ten o'clock.

Deferred Divisions
	  
	Business of the House

That, at the sitting on Monday 22nd July, the Motion for the Adjournment of the House in the name of the Prime Minister relating to matters to be considered before the forthcoming Adjournment may be proceeded with, though opposed, for three hours, and the Motion shall then lapse.
	The House divided: Ayes 13, Noes 289.

Question accordingly negatived.